Dell Technologies, which gets about 55% of its revenue from PCs, saw a 6% decline in sales in the third quarter of 2022, while forecasts showed revenue falling well below estimates as consumers cut spending on computer hardware. File photo by John Angelillo/UPI | License Photo
Feb. 6 (UPI) -- Dell plans to lay off 6,650 employees as the company responds to waning demand for its personal computers -- the latest in a chorus of American tech giants forced to downsize as inflation-weary consumers change their spending habits.
The forthcoming job cuts will amount to 5% of Dell's global workforce, the company reported Monday in a regulatory filing with the U.S. Securities and Exchange Commission.
The Texas-based company made the cost-cutting move based on economic conditions that "continue to erode with an uncertain future," Co-Chief Operating Officer Jeff Clarke wrote in a memo titled "Preparing for the Road Ahead."
"We've navigated economic downturns before and we've emerged stronger," Clarke wrote in his note to employees. "We will be ready when the market rebounds."
The company, which gets about 55% of its revenue from PCs, saw a 6% decline in sales in the third quarter of 2022, while forecasts showed revenue falling well below estimates as consumers cut spending on computer hardware.
Dell shares were down nearly 4% in early trading Monday while the company was expected to provide more insights about the job cuts when it delivers its fourth-quarter economic report on March 2.
Dell and other major computer brands like HP and Lenovo have seen sales plummet following a surge in popularity during the height of the COVID-19 pandemic.
Recent economic data showed shipments of personal computers tumbled hard in late 2022, with Dell seeing a 37% dip in sales compared to the year before -- the biggest loss among major U.S. computer makers.
Recognizing trouble on the horizon months ago, Dell's front office took more muted measures to save money, including hiring freezes, reducing third-party vendors, and curtailing employee travel -- but those efforts ultimately failed to achieve short-term efficiency.
"The steps we've taken to stay ahead of downturn impacts -- which enabled several strong quarters in a row - are no longer enough. We now have to make additional decisions to prepare for the road ahead," Clarke wrote, adding that "a series of changes" would be implemented "in the coming days and weeks."
The latest move by Dell will reduce staffing at the company to its lowest level in at least six years, with about 39,000 fewer employees than it had about three years ago.
The staff cuts will occur in several departments including global sales, where teams will be realigned for better efficiency; and support services to focus on improving front-facing communication with customers.
Meanwhile, job cuts have soared across the tech industry in recent months with more than 97,000 layoffs coming throughout 2022 following many years of economic resilience. However, several convergent economic conditions including rampant inflation, slow domestic growth, and supply chain breakdowns have led to an unconventional slump for Big Tech, with Amazon, Google, Meta and Microsoft all announcing huge staff cuts in recent weeks.
Last November HP announced a plan to lay off 6,000 employees. IBM and Cisco Systems and IBM also slashed about 4,000 positions each, while Lenovo let go of an undisclosed number of employees in December.
About one-third of Dell employees are based in the United States, the company told regulators in March 2022.