Menu
Dell eyes $3 billion in cost savings in three years

Dell eyes $3 billion in cost savings in three years

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 has said.

"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 annualised savings of $3 billion. This means that before you adjust for growth, we believe our costs at the end of our fiscal 2011 will be $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 February 28, but said it cost $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 3200 people, and plans to cut around 5600 more jobs.

The bulk of the $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.


Follow Us

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.

Tags Dellinternational newscitcutting costs

Featured

Slideshows

The making of an MSSP: a blueprint for growth in NZ

The making of an MSSP: a blueprint for growth in NZ

Partners are actively building out security practices and services to match, yet remain challenged by a lack of guidance in the market. This exclusive Reseller News Roundtable - in association with Sophos - assessed the making of an MSSP, outlining the blueprint for growth and how partners can differentiate in New Zealand.

The making of an MSSP: a blueprint for growth in NZ
Reseller News Platinum Club celebrates leading partners in 2018

Reseller News Platinum Club celebrates leading partners in 2018

The leading players of the New Zealand channel came together to celebrate a year of achievement at the inaugural Reseller News Platinum Club lunch in Auckland. Following the Reseller News Innovation Awards, Platinum Club provides a platform to showcase the top performing partners and start-ups of the past 12 months, with more than ​​50 organisations in the spotlight.​​​

Reseller News Platinum Club celebrates leading partners in 2018
Meet the top performing HP partners in NZ

Meet the top performing HP partners in NZ

HP has honoured its leading partners in New Zealand during 2018, following 12 months of growth through the local channel. Unveiled during the fourth running of the ceremony in Auckland, the awards recognise and celebrate excellence, growth, consistency and engagement of standout Kiwi partners.

Meet the top performing HP partners in NZ
Show Comments