Dell plans to lay off nearly 5% of its workforce

© Damian Dovarganes, Associated Press Michael Dell, founder of Dell Inc., unveils the Dell 2707WFP monitor at the 2007 International Consumer Electronics Show in Las Vegas on Jan. 9, 2007.

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.

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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.”