According to a report by Bloomberg, Dell also noted that restrictions on external hiring, job reorganisations, and other measures will lead to a “continued reduction in our overall headcount” for the fiscal year ending in February 2025.
In June, the company reduced its workforce, mainly in the sales department. However, it didn’t specify the number of employees that were affected. Due to these layoffs, Dell had to pay $328 million in severance costs during that quarter. In February, the company reportedly had nearly 120,000 full-time employees worldwide.
What Dell said about layoffs
“We remain committed to disciplined cost management in coordination with our ongoing business transformation initiatives and will continue to take certain measures to reduce costs,” Dell said in a regulatory filing seen by Bloomberg.
Dell’s concern behind announcing the job cuts warning
As per the report, Dell is focusing on expanding its business of selling high-powered servers designed for AI tasks. This new growth area has also reportedly excited investors as the company’s stock has increased by 39%.
However, Dell is concerned about the profitability of equipment sold by the company and its rivals like Super Micro Computer (SMC) and Hewlett Packard Enterprise (HPE), as these AI servers require expensive computer chips from companies like Nvidia.
Dell claimed that a higher proportion of AI server sales impacted margins in the most recent quarter, even though overall profit improved compared to the previous period, the report noted
Meanwhile, the company’s more established PC business has not rebounded as strongly as expected following a two-year slump. Last month, the company reported $12.4 billion in fiscal second-quarter revenue, which was down 4% from the same period a year ago as well as slightly below estimates. Even though sales of business PCs remained steady, the revenue from consumer PCs dropped by 22% year-over-year.
