Dell Laying Off Thousands, Amid Severe Decline In PC Customers
Dell is laying off 6,650 employees after underperforming in the 4th quarter of 2022.
Over the last quarter of 2022, a trend at many large technology companies was laying off employees ahead of the holiday season in anticipation of a sales slump in the consumer market. Now the 4th quarter sales reports are flowing in, and many companies that did not already lay off employees are facing the unfortunate reality that they will have to follow suit. Dell, one of the world leaders in personal computer production and distribution, announced on Monday that they would be laying off approximately 6,650 jobs.
Dell has seen a sharp drop off in demand for its PCs throughout the 4th quarter of last year, and their shipment figures were down by 37% over the same period in 2021. Dell had been attempting to cut expenses in other areas of their business to hopefully stave off the need to lay off its employees. According to The Verge, “Dell Co-Chief Operating Officer Jeff Clarke said that the company’s previous cost-cutting measures, such as a pause on hiring and limitations on travel, have proved insufficient.”
Clarke also goes on to say that in order for Dell to continue forward as a fiscally healthy and successful company, it is imperative that they make the difficult decision to reorganize its departments and shed human capital from its workforce. “The layoffs will bring Dell to its lowest employee count in six years,” according to a Bloomberg report. In January 2020 Dell employed 165,000 full-time workers, and that number has since decreased by 39,000 jobs which equates to just shy of a 25% contraction in the company.
The PC company saw a giant boost in sales during the Covid-19 pandemic from consumers who were stuck at home looking to upgrade their personal computer systems, but that trend has run its course, and those consumers will be set on their PC needs for the near future. However, that is not the only factor that is impacting the tech industry’s bottom line. Another factor is that the Federal Reserve has continued to raise interest rates for eight consecutive meetings which have bolstered Federal Treasury Bond’s investment value and we are seeing a lot of investors sell their tech company stocks and put their money into those secure bonds backed by the United States Government.
One of the more interesting factors that are impacting technology companies is that the US dollar is performing well when you compare it to other nations’ currency values. This is great news for American consumers buying power becoming stronger worldwide, but that unfortunately is bad news for many tech companies as a large percentage of their business is done overseas. Companies like Dell will earn less profit from those sales they make in different countries because that country’s currency is significantly weaker.
We have seen layoffs from other PC manufacturers in the past few months. In November, Hewlett Packard announced 6,000 layoffs, while in December Lenovo had an undisclosed number of employees let go as well. The downturn of the economy, and supply chain issues with China have impacted the broader technology industry as a whole with Amazon, Meta, Google, and Microsoft also laying off massive amounts of employees in recent months. As economists have indicated, we might escape an economic recession that is certainly not making any of these laid-off workers feel any better about their current situation.
