Thursday, May 31, 2007

Dell Looks Out For The Bottom Line

Today Dell announced it was cutting 10 per cent of it's worldwide workforce, or around 8,800 jobs. Wall St. was wowed.
Dell shares jumped more than 7 percent in after-hours trading on the news after finishing about 2 percent higher on the Nasdaq in regular trading.
The Round Rock, Texas, computer maker reported net income of $759 million, or 34 cents a share, for its fiscal first quarter ended May 4, compared with net earnings of $762 million, or 33 cents a share, a year earlier. Analysts surveyed by Thomson Financial had expected earnings of 26 cents a share.
Now I'm sure Wall St. was thrilled as investors could expect to make more profits, but I sort of think about the 8,800 moms and dads now worrying about if their number will come up. Does this mean anything? Well, no, except I'm a softie and unless you've been one these 8,800 people, it's just numbers.

As I scrolled down this story, yes wondering about my Dell stock, I noticed a link to a related story.
Computer marker Dell plans to start selling personal computers at 3,000 Wal-Mart stores in the United States and Canada as of June 10, launching a major drive to sell its PCs through retailers, a company spokesman said on Thursday
I don't have any proof, but do you see some sort of linkage between these stories? The question I have is where in the world are these job cuts going to be? I haven't been able to find out, but when you agree to sell computers to the largest retailer in the world, you better deliver the lowest price.

These stories came out one week apart, the story concerning Wal-Mart came out a week ago.

How much you want to bet the job cuts are all in this country and then there will be corresponding hirings in China? I guess it's good business, but you don't have to like it.

I think it's ironic that some of Dell's ex-employees will end up working at Wal-Mart, but won't be able to afford to buy the computers they used to make.

Jim Martin

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