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alexeynovikov / depositphotos Dell Technologies Inc (NYSE:DELL) expected to lay off 5% of its global workforce, around 6,650 jobs It has been hit by plunging PC Sales It's the latest restructuring drive in a wave of tech layoffs
Tech Layoffs Hit Dell
It was only a matter of time before the wave of tech layoffs reached Dell's shores, given how sensitive the company is to both consumer and corporate confidence. The company had already limited recruitment and cut back on spending, with Cisco Systems Inc (NASDAQ:CSCO), HP Inc (NYSE:HPQ) and IBM (NYSE:IBM) also restructuring.
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To try and weather the incoming storm, it seems clear Dell required a much bigger hammer to try and knock the company into a more defensive shape and prepare for the AI future.
The company has been buffeted by the crosswinds unleashed as the era of cheap money came to an abrupt end and sales dropped following the pandemic surge. Many companies brought forward IT purchases during the crisis, as the world shifted to virtual ways of working, which has inevitably had an impact on future budgets. With interest rates hurtling upwards and more firms becoming cautious, there has been a double whammy effect on PC sales.
The admission of a sales struggle saw Dell's share price drop in pre-market trade, particularly given uncertain outlook painted by the co-chief operating officer Jeff Clarke.
Some investors are also likely to be querying whether this restructuring drive will be enough to provide efficiencies across the operations, given the downturn in business.
Big tech is in the brace position, shedding staff left, right and centre, to try and protect core business and also ringfence spending to arm themselves for the fight in the artificial intelligence arena. Dell clearly wants to retain financial firepower to develop systems built for AI, and build on its new line of PowerEdge servers but this will require significant R&D at a time when competitors are also seriously upping their game.''
Article by Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown