Dell Computer Corp. confirmed Thursday that it has withdrawn internship offers and job offers to save money, capping a turbulent week for the PC vendor that included an acknowledgement from a high-ranking executive that the company might lay off more employees.
“Some MBA offers for internships and some full-time positions were rescinded,” Dell spokesman Mike Maher said.
The company would not make numbers available “because other companies watch our MBA program closely,” Maher said, noting that Dell doesn’t even release acceptance rates for the program.
“The fact remains that we’re operating in a softer demand environment for products,” he said. “As we’ve done in years past, we need to size our business to meet those demands.”
As to whether Dell would be implementing other measures, such as mandatory time off, as announced by companies including Adobe Systems Inc. and Sun Microsystems Inc., Maher declined to speculate.
Earlier this week, a high-ranking Dell executive acknowledged the company might have to lay off employees after financial analysts were quoted in the press saying that Dell would have to let go an additional 3,000 people to reduce its operating expenses.
In February, Dell surprised many by announcing that it would lay off 1,700 employees just hours before announcing its fourth quarter results. It appears the vendor might do the same thing when it reports its quarterly earnings in two weeks.
“I bet they’re going to do it before their financials,” International Data Corp. (IDC) analyst Roger Kay said.
At a conference in New York this week, Tom Meredith confirmed that the company would consider further layoffs. Meredith stepped down from his seven-year position as CFO last year to become the head of Dell Ventures.
Typically, a layoff announcement isn’t leaked to the media if the company plans to reveal it during the earnings-report conference call, IDC’s Kay said. “It’s weird how (Tom) Meredith is the one saying that Dell would consider more layoffs; why isn’t it the new chief financial officer, or (chief executive officer) Michael (Dell)?”
There also seems to be something about Dell that Wall Street doesn’t like, Kay said. “Wall Street has been pretty negative on them,” he said, referring to an analyst downgrade announced this week.
While Dell had the edge in the PC market, the economy suddenly turned south. Dell managed to take advantage of the downturn in the economy to underprice its rivals, Kay said. Dell has managed to keep up that price war, and holds the top spot in PC shipments worldwide.
Dell is still keeping up a price war against the competition, and it is winning, Kay said. Because it took the initiative in lowering prices, Dell has been able to architect the price cuts so that it can maintain positive margins. But its competition has been forced to react to Dell’s cuts, losing money in the process, he added.
According to Kay, one thing is for certain: Dell’s carefree ride has finished. “I think it will be very difficult for Dell to get back to the kind of gross margins it had in the past,” he said.
IDC is a subsidiary of International Data Group Inc., the parent company of IDG News Service.
Dell, in Round Rock, Tex., can be reached at http://www.dell.com/.