Dell joins EMC and Lenovo in axing staff
More bad news for tech sector.
By Techworld staff | Techworld
Published: 12:35 GMT, 08 January 09
A group of tech firms have announced significant cuts to their workforces, after Dell, EMC and Lenovo all said they would hand out pink slips to a total of 6,800 staff.
Dell has confirmed the worst fears of Irish officials after announcing that it will cut 1,900 of the 3,000 jobs at Limerick in the Irish Republic, ending production at its largest manufacturing plant outside the US. The move is a massive blow for the Irish economy, and comes as the PC maker seeks to cut $3 billion (£1.99 billion) of costs globally.
Last month analyst house IDC warned that slowing demand for new equipment could affect PC makers next year, leading to industry consolidation.
Dell is looking to move production to a new factory in Poland, and the remaining 1,100 staff at Limerick will work in engineering, product development, and logistics. Dell is thought to have another 1,300 marketing and sales staff at the Cherrywood plant in south Dublin.
The move is undeniably bad news for the Irish economy, and Irish officials had lobbied hard against the move. Dell is reportedly Ireland's largest exporter and second-largest company, accounting for about 5 percent of Irish GDP.
The bad news for the tech sector was compiled when EMC said it was instituting a restructuring program that included laying off 2,400 people, despite the storage giant expecting to meet its revenue estimates for the fourth quarter.
EMC said the restructuring move is aimed at streamlining costs associated with EMC's Information Infrastructure business and will not affect VMware, EMC's virtualisation subsidiary. The 2,400 people represent about 7 percent of the Information Infrastructure business.
EMC said that it expects fourth-quarter 2008 revenue to reach $4 billion, up 4 percent over the same quarter in the previous year. EMC said it managed to grow despite the downturn, because virtualisation products and information infrastructure are at, or near the top, of enterprise IT spending priorities.
EMC's restructuring plan will also include consolidation of back-office functions and offices, reduction of management layers, decreased spending on contractors and travel, and a rebalance of investments toward higher growth products and markets.
The final job losses announcement came from Lenovo, which said it plans to lay off 2,500 workers, or 11 percent of its global workforce. It also plans to cut the salaries of its executives and restructure its Asian operations in an attempt to weather the downturn.
These layoffs will result in a $150 million (£99.6 million) restructuring charge, the majority of which will be taken during the current quarter.
The Chinese PC maker said that staff will be let go during the first quarter of 2009 but did not reveal where the layoffs will take place or whether they would be spread evenly across all of the regions where the company operates.
Lenovo will also cut the pay of managers by 30 percent to 50 percent, including bonuses, and wants to rein in spending on expenses and other functions, such as human resources, finance and marketing, it said. The company also plans to combine its operations in Asia-Pacific and Russia under the lead of Chen Shaopeng, who currently heads Lenovo's China operations.
Additional material provided by Sumner Lemon and Nancy Gohring of the IDG news service.
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