Dell to Save $3B Over 3 Years

Posted March 31, 2008 4:56 p.m. EDT
Updated March 31, 2008 10:28 p.m. EDT

— Dell Inc. said Monday it will save as much as $3 billion over the next three years as it cuts costs and lays off workers, with measures including closing a desktop manufacturing facility in Austin.

The world's No. 2 computer maker will cut 900 of 17,500 jobs in the Austin area by closing the plant, company spokesman David Frink said.

Dell, who operates largest manufacturing plant for PCs and servers in Winston-Salem, also reaffirmed its plan - announced last year - to cut at least 8,800 jobs, or about 10 percent of its work force. Frink said the Round Rock-based company didn't have a time frame to reach that number.

In the last nine months of fiscal 2008, Dell cut 3,200 jobs.

The Austin facility will close late in fiscal 2009, which ends January 31, Frink said.

"Frankly, the elimination of jobs is significant whenever and wherever you do it," said Frink. "We're working to minimize the consequences."

Two months ago, Dell announced 1,200 job cuts, about 900 at a call center in Canada.

The company also is closing 140 kiosks, mostly in shopping malls, where customers could examine and order computers but not buy them to take with them.

Dell, built on sales direct to consumers, is striking deals with more retailers to sell them in lieu of using the kiosks.

The company also plans a range of cost cuts in design, manufacturing and logistics - and materials and operations.

"We're talking about action we're taking to improve our competitive advantage and to rationalize our operations," Frink said.

And it is reviewing alternatives for its financial services business, especially its consumer credit and its financing operation for small to medium business customers. The company recently assumed full ownership of its credit arm.
Frink said the review could result in no change or in the pursuit of new partnerships.

"We're absolutely committed to financing being an integral part of our overall business," Frink said. "Dell Financial Services is a profitable Dell asset. We believe the combination of Dell and the right structuring going forward will actually be able to enhance it."

Shares of Dell rose 31 cents to close at $19.92. They dropped and then regained 25 cents in after-hours trading.