Dell eyes $3 billion in cost savings in 3 years

Dell plans to reduce costs by $3 billion through job cuts and negotiating lower parts prices.

Dell, the world's second largest PC vendor, plans to cut costs by US$3 billion as it slashes the price of materials and components going into its gadgets and reduces operating expenses, including jobs, the company said Monday.

"Now this does not happen over night," said Lynn Tyson, vice president of investor relations at Dell, on the company's investor blog. "In fact we said we believe it will take three years to achieve an annualized savings of US$3 billion. This means that before you adjust for growth, we believe our costs at the end of our fiscal 2011 will be US$3 billion lower than at the end of fiscal 2008."

Money saved from the cost reductions will be invested back into the business and used to improve profitability, Tyson said.

The company reported revenue of $61.1 billion at the end of its fiscal 2008, on Feb. 28, but said it cost US$49.5 billion to generate that revenue, including operating expenses, cost of goods sold, research and development and other factors.

As part of its cost cutting, Dell plans to close a desktop manufacturing plant in Austin, Texas. A "massive shift in customer preference for notebooks" over the past three years was also a major factor in the decision to close the plant, said Tyson. In the 2008 fiscal year, Dell's laptop sales grew 37 percent, while desktop sales were up just 10 percent, she said.

Dell is also slashing jobs. The company has already reduced its workforce by 3,200 people, and plans to cut around 5,600 more jobs.

The bulk of the US$3 billion in savings at Dell will come from reducing product costs. The company will seek savings in all areas, from design, manufacturing, logistics, materials and operating expenses, according to a statement.

The company may also sell or spin off its financing arm, Dell Financial Services, it said. Dell acquired the remaining 30 percent of the financing arm last year from partner CIT.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Dan Nystedt

IDG News Service
Show Comments

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Luke Hill

MSI GT75 TITAN

I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Laura Johnston

MSI GS65 Stealth Thin

If you can afford the price tag, it is well worth the money. It out performs any other laptop I have tried for gaming, and the transportable design and incredible display also make it ideal for work.

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?