Dell CEO says to expect more job cuts

By ELIZABETH WHITE

AP Business Writer

At the first full analyst meeting since 2005, Dell addressed the ongoing turnaround of the computer company, which was eclipsed as the world's largest PC maker in 2006 by Hewlett-Packard Co.

"We have identified a very significant opportunity here and are aggressively going after it," Dell said. "To be very clear, we are not satisfied with the current state of affairs and we are on a mission to address this."

Dell aims to cut $3 billion over the next several years to boost profits.

Last year, the company announced plans to cut 8,800 jobs, or 10 percent of its work force. The company this week announced plans to cut 900 jobs in the Austin area by closing a plant.

"We're decreasing our head count," Dell said. "It's declined in the past two quarters and it will decline again in the first quarter. And we will go past the 8,800 target previously discussed as we achieve everything that I'm outlining today."

Asked for specifics after the meeting, Dell said there was no forecast.

"We'll go past it, at least by one," he said. "We'll for sure get the 8,800."

He also declined to forecast when the company's turnaround will be complete.

"I'm not going to declare when we're done, when we're not done," Dell said. "In my view of things, we're continuously improving our business."

CFO Donald Carty said Thursday that 5,500 jobs have been cut, with 1,000 more to come this quarter. He added that with an increase in "front-line" personnel - those in positions like sales and customer support - the net reduction is 3,200.

Carty also said the company plans a share repurchase of at least $1 billion this quarter after repurchasing $4 billion last quarter.

To accomplish the cost cuts, Dell said the company is taking the approach that it has no fixed costs.

"Every area of the company is being pursued," he told analysts.

Keith Bachman, an analyst for BMO Capital Markets-US, said in a note about Wednesday, the first day of the analyst meeting, that "on a general level, we continue to believe that Dell has several areas of operational improvement, driven by the consequences of past strategic mistakes."

Dell said the company expects its operating expenses percent to be down at the end of the year.

"The entire Dell leadership team is focused on addressing these opportunities and challenges," Dell said. "We believe we've begun the journey to transform the company."

But Carty also noted that the slowed U.S. economy "is going to have some impact on the top line."

Dell built its business by selling computers directly to companies and consumers on the phone or over the Internet, but now it's selling through retailers including Best Buy Co., Wal-Mart Sores Inc. and Staples Inc.

In January, the Round Rock-based company completed a $1.4 billion acquisition of EqualLogic Inc., which makes data-storage network systems. But Dell told analysts not to "hold your breath for a big acquisition."

"We don't have an acquisition strategy," Dell said Thursday. "What we have is a growth strategy."

The company has focused its ongoing turnaround efforts on five priorities: notebooks, emerging countries, consumer, enterprise and small-medium business.

Its shares rose 17 cents in regular trading Thursday to close at $20.12.

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