Shares of US computer maker Dell fell nearly 6 per cent today following a report that it may be readying for layoffs and expense cuts of up to 10 per cent due to weak demand and a price war.
Dell spokesman Mr Mike Maher declined on Thursday night to comment about any such move, which was first reported in the Wall Street Journal.
Citing people familiar with the directive, the newspaper reported in its Friday edition that Dell had warned some managers about expense cuts of between 8 per cent and 10 per cent. The article also said some employees of the company believe as many as 4,000 of its 39,000 jobs could be lost.
Mr Maher did say Dell was cutting back its temporary work force, which he said was typical for the beginning of a fiscal quarter.
Computer makers have been reining in their expenses recently, bracing for an extended period of weak profits. In January, PC and printer maker Hewlett-Packard said it would eliminate 1,700 positions, and Gateway said it would cut about 3,000 jobs.
"I think the industry conditions are still unstable," Bear Stearns analyst Mr Andrew Neff said.
In January, Dell warned that it would post disappointing results in the fourth quarter, joining a gang of other PC companies - including Apple, Compaq, Gateway, and Hewlett-Packard - that have guided their outlooks lower.
In a conference call after the warning, Vice Chairman Kevin Rollins hinted that cost-cutting could be in the cards. "In a tough economic environment," he said, "the low-cost model wins."
Reuters