American PC maker Dell disclosed that it would part ways with 5% of its workforce after what has been a sub-par 2022 in terms of PC sales. In an SEC filing, the company said it is reorganizing and taking actions to “align its investments more closely with its previously discussed strategic and customer priorities.â€
Dell laying off 5% of its workforce equates to approximately 6,650 of its 133,000 employeesOpens a new window getting the axe. In an internal memo to employees shared publicly, Dell COO and Vice Chairman Jeff Clark outlined the changes employees can expect, including restructuring the Regional Sales and Dell Technologies Select (DTS) teams.
Dell will also integrate support services into Client Solutions Group (CSG that covers laptops and desktops) and Infrastructure Solutions Group (ISG that covers data center hardware, including storage, networking, and servers). The latter will also see a shift in engineering investments.
In Q3 2022, Dell’s net revenue declined by 6% from $26.42 billion to $24.72 billion year-over-year (YoY). During the same period, the company’s net income crashed by 93% during the same period, from $3.68 billion to $241 million.
“Market conditions continue to erode with an uncertain future. The steps we’ve taken to stay ahead of downturn impacts — which enabled several strong quarters in a row — are no longer enough. We now have to make additional decisions to prepare for the road ahead,†Clark notedOpens a new window .
Dell is slated to present its Q4 2022 earnings later in February 2023, but for the nine months that ended October 2022, the company’s net revenue increased by 6%, but the net income declined by 63%. Let us take a closer look at Dell’s quarterly numbers in 2022.
|
Quarter |
Q4 2021Opens a new window | Q1 2022Opens a new window | Q2 2022Opens a new window | |
|
Net Revenue (in billion $) |
27.99 | 26.11 | 26.42 | 24.72 |
| % Change in Net Revenue QoQ | -1.408 | -6.71 | 1.18 |
-6.43 |
|
% Change in Net Revenue YoY |
16% | 16% | 9% | -6% |
| Net Income (in billion $) | 0.01 | 1.069 | 0.506 |
0.241 |
|
% Change in Net Income QoQ |
-99.74 | 10590 | -52.66 | -52.37 |
| % Change in Net Income YoY | 100% | 62% | -20% |
-93% |
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As the numbers indicate, Dell is on a downward trajectory. Dell’s numbers are synonymous with the broader market results in 2022, wherein companies have been reeling from diminishing PC sales. According to market research firms, PC sales declined by 28.1% (IDC), 28.5% (Gartner) and 29% (Canalys) in Q4 2022. Overall in 2022, PC shipments slid by 16.5% (IDC), 16.2% (Gartner) and 19% (Canalys).
Interestingly, while Dell’s CSG division performance has been dwindling, ISG has fared well. ISG posted a 12% increase in Q3 2022 net revenue (13% in nine months ended October 2022) compared to -17% at CSG (2% in nine months ended October 2022).
While Dell’s Q4 2022 results are out, IDC assessed that the number of PCs that Dell shipped in 2022 (49.8 million) decreased by 16.1%. Dell is the third-largest global PC vendor after Lenovo and HP (laid off ~6,000 employees in November 2022).
Overall, 308 companies have laid off 95,508Opens a new window employees so far in 2023.
Mikako Kitagawa, director analyst at Gartner, notedOpens a new window , “The PC industry experienced very unusual ups and downs over the past 11 years. After the extraordinary growth period between 2020 and 2021 due to the pandemic, the market has clearly begun a downward trend which will continue until the beginning of 2024.â€
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