On Monday, Dell announced that the company plans to lay off about 6,500 of its 133,000 employees, accounting for nearly 5% of the company, CNN reported.
Why? Co-chief operating officer Jeff Clarke wrote in a memo that the company was facing eroding market conditions, stating that other cost-cutting measures weren’t enough.
- CNBC states that these layoffs come as the global demand for laptops and PCs has slowed.
- Global shipments of PCs fell 28% year over year in the fourth quarter of 2022, and Dell computer shipments fell by 37% during the same period, CNBC reported.
Details: Clarke also announced that other changes will be implemented within the company to “focus on purpose-driven work and be in the best position to make the greatest difference for customers, Dell Technologies and each other.”
- “Unfortunately, with changes like this, some members of our team will be leaving the company,” Clarke continued. “There is no tougher decision, but one we had to make for our long-term health and success. Please know we’ll support those impacted as they transition to their next opportunities.”
The bigger picture: Dell’s news comes during a wave of tech industry layoffs, BBC reported, stating that layoffs in the U.S. hit a two year high in January.
- Several large tech companies such as Amazon, PayPal, Microsoft and Meta have seen significant layoffs in the last year, according to Yahoo Finance.
- “We find that three characteristics are common to many of the companies that have recently announced a large number of layoffs,” Goldman Sachs chief economist Jan Hatzius said, according to Yahoo.
- “First, many are in the technology sector,” Hatzius continued. “Second, many hired aggressively during the pandemic — on average, their headcount grew 41% — often because they over-extrapolated pandemic-related trends such as increases in demand for goods or time spent online. Third, they have seen sharper declines in their stock prices, which have fallen 43% from their peaks on average, and in some cases appear to be responding to investor demand to cut costs by shrinking their workforces rather than to a worsening in the demand outlook.”