Category: Archive

Dell set to chill economy

February 17, 2011

By Staff Reporter

Industry observers have said Ireland may prove particularly vulnerable to any attempt by the company to minimize its costs. Last week 60 Irish staff were laid off only days before Dell announced that it was revising its results downwards.
Some experts predict that a further 140 Irish staff may be laid off in the coming weeks.
Dell’s third quarter results, published tomorrow, are expected to report earnings of 39 cents per share — short of Wall Street expectations of 40 cents.
The company said revenues would be “approximately $13.9 billion,” significantly shy of a previous guidance that put returns at between $14.1 and $14.5 billion. It said the shortfall was due to its U.S. and British consumer market “which fell short of expectations.”
More than $30 billion has been wiped off the value of the company since the beginning of the year.
Dell, which specializes in the lower-end of the PC market, employs 4,650 people in Ireland, and is regarded as the country’s largest exporter. Fifty of those laid off last week worked in the company’s Cherrywood call centre in Dublin. The other ten were based in the company’s Limerick manufacturing plant.
With a decline in the Irish manufacturing sector in recent times, the role of Dell is a crucial one, and any moves to downsize the Irish workforce could send a chill through the wider economy.
While Dell has moved to quash fears that any major action will be taken in the short-term, observers believe that the company may be forced to further reduce its international workforce in the coming years.
Jess Blackburn, Dell spokesman, was quoted as saying: “We took several actions, which were designed to enhance operating efficiency, improve our performance and also reduce costs. Those steps resulted in some job eliminations.”
The Irish economy is under intense pressure from the low-cost economies of Eastern Europe, and Poland is believed to pose the biggest threat to Dell’s Irish outfit.
The conclusions of financial weekly newspaper Barron’s Inc. will make for some unnerving reading. On Monday it said that the Dell’s “best days” may be behind it.
Barron’s noted that “Dell’s revenue growth has now slowed for seven quarters in a row.”
“If Dell’s revenue fails to grow faster, and certainly if the company continues to miss earnings targets, it will be time to admit that Dell is past its best,” said the newspaper.

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