Dell Trims Workforce and Projects PC Growth Amid Revenue Challenges and VMware Changes

Dell Technologies Inc DELL has implemented workforce reductions as part of its comprehensive cost-cutting strategy, which also encompasses constraints on external hiring and internal employee reorganizations. 

As of February 2, 2024, Dell’s workforce has decreased to nearly 120,000 employees from about 126,000 the previous year, reflecting these changes. 

This decision follows a declining demand for personal computers, which has lasted nearly two years and contributed to an 11% decrease in the company’s revenue in the fourth quarter of the previous fiscal year.

Despite experiencing a 12% drop in revenue in its client solutions group, which includes its PC division, during the fourth quarter, Dell remains optimistic. The company anticipates overall growth in this segment for the entire year. 

Dell acknowledges that it is facing short-term challenges but expects an improvement in demand and a more competitive pricing environment in the fiscal year 2025, Reuters reports.

Nonetheless, Dell foresees a rise in input costs and anticipates a continued decline in net revenue from its other business segments due to alterations in its commercial relationship with VMware.

In the backdrop of adjusting to market demands and potential economic downturns, Dell had previously reduced its workforce by 6,650 positions in 2023. U.S. Big Tech companies have been on a downsizing spree, citing lackluster demand and an upturn in AI investment.

In 2023, Alphabet Inc GOOG GOOGL Google announced it would cut 12,000 jobs, affecting about 6% of its full-time staff. 

Meta Platforms Inc META has been reducing its workforce since November 2022, planning to cut 21,000 positions, nearly a quarter of its employees.

In January, Microsoft Corp MSFT disclosed plans to trim its workforce by approximately 10,000 roles, representing 4% – 5% of its total employees. Amazon.Com Inc AMZN set a record for the largest layoff in 2023 by cutting 27,000 jobs. Compared to about 6,000 the previous year, the sector saw 141,516 job cuts in the year’s first half.

Dell stock gained 198% in the last 12 months. Investors can gain exposure to the stock via Elevation Series Trust SRH U.S. Quality ETF SRHQ and Invesco Dorsey Wright Technology Momentum ETF PTF.

Price Action: DELL shares traded higher by 1.33% to $114.50 premarket on the last check Tuesday. 

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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