Dell is laying off 5% of its workforce amid falling demand for computers

Dell Technologies Inc. announced today in a regulatory filing that it plans to lay off approximately 5% of its workforce, or approximately 6,650 employees.

Jeff Clarke, Dell’s co-chief operating officer, wrote in an internal memo that the move was part of an initiative to “better structure us for the future, work better together, reduce complexity, increase speed and accelerate innovation”. . The initiative also sees Dell make a number of changes to its organizational structure.

Dell will reorganize the business units responsible for providing technical support to customers. In addition, the company plans to update the structure of its regional sales and its DT Select divisions. DT Select, a business division focused on Dell’s largest enterprise customers, was created after the company acquired storage device maker EMC in 2016.

Dell’s infrastructure solutions group will also see changes. The group responsible for the company’s data center hardware portfolio will adjust its engineering investments. Clarke said ISG will reallocate engineering resources to “priority offerings that best meet the needs of our customers and partners.”

ISG accounted for $9.6 billion of the $24.7 billion in revenue Dell generated in the third quarter ended Oct. 28. ISG’s revenue grew 12% year-over-year this quarter, driven by increased customer demand for servers, networking equipment and data center storage systems.

In contrast, Dell’s Client Solutions group saw its revenue drop 17% over the same period. The division is responsible for Dell’s personal computers and other consumer devices. Division revenue was impacted by a decline in global PC demand, which also impacted Dell’s competitors.

International Data Corp. estimates that global computer shipments fell 15% year-on-year in the third quarter. According to research by IDC and Gartner Inc., the PC market saw an even steeper 28% decline in demand in the fourth quarter, the largest decline on record.

Dell’s rival HP Inc. was also hurt by the drop in PC purchases. HP’s Personal Systems revenue segment, which includes its PC division, reported revenue for the quarter ended Oct. 31, down 21% from a year earlier. Shortly after reporting its quarterly results in November, the company announced plans to lay off 4,000 to 6,000 employees over three years to cut costs by up to $1.4 billion a year.

“Remember, we’ve weathered economic downturns before and come out of them stronger,” Clarke wrote in today’s memo to employees. “We will prevail as always, for our customers, our partners and for each other. We are becoming more competitive, more focused and achieving a new level of operational performance. We will be ready when the market recovers.

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