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Layoffs At Now-Private Dell May Hit Over 15,000 Staffers
schwit1 writes "Curious why Michael Dell was so eager to take the company he founded private? So he could do stuff like this without attracting too much attention. According to the Channel Register, the recently LBOed company is 'starting the expected huge layoff program this week, claiming numbers will be north of 15,000.' Of course, with a private sponsor in charge of the recently public company, the only thing that matters now is maximizing cash flows in an environment of falling PC sales, a commoditisation of the server market and a perceived need to better serve enterprises with their ever-increasing mobile and cloud-focused IT requirements — things that do not bode well for Dell's EBITDA — and the result is perhaps the largest axing round in the company's history. But at least the shareholders cashed out while they could."
At least they get health coverage for the next 18 months.
Pain is merely failure leaving the body
This should have been done by the previous management. Dell is running a company whose business is in serious decline where no-one really knwos where the market will be in five to ten years time. Doing anything else would be commercial suicide.
[FUCK BETA]
Of course, with a private sponsor in charge of the recently public company, the only thing that matters now is maximizing cash flows ......
How is it different now that they are private? Don’t public firms try to maximize profits? I know back in the 80’s, LBO tried to generate as much as cash flow because they have mortgage everything and were up to their eyeballs in debt. Dell is nowhere near that.
No, this is because Mr. Dell wants to take Dell Inc. in a new direction as fast as he can – away from the low profits of a commodity business.
I bet he'll still go to Congress this year and tell them that he needs more visa to import more indentured servants.
The cow says "Moo." The dog says "Woof." The Timothy says "Thanks, valued customer. We appreciate your input."
a lot of Indians called "steve" are gonna be pissed off
PC sales have been steadily declining for years. Large PC maker lays off employees. And? Same thing happened at record player companies. And typewriter companies. And factories that produced film. If you want to complain about something, the complain about how Dell couldn't turn itself into Apple or Google. Laying off people is the only way to save the company at this point in time.
Better known as 318230.
A tech company laying off around 10% of its workforce isn't drastically shrinking. They're just doing routine housekeeping.
In my personal experience, their quality has been declining in recent years (poor internal design, bad fit and finish, on the boxes by them that I've had to use). A shift to mobile computing is part of the blame, probably, but I don't think the Dell brand has the same strength in recent years as it had in the past.
Usually when big companies make big moves like this their stock price goes up as they are cutting costs. This article makes it osund like it would have been a bad thing to fire people while it was still a publicly traed company. Publicly traded companies fire people all the time, it' snot better or worse or different now that they are private.
I'm considering buying an M6800 workstation-class laptop from them. But it's only worthwhile if they'll be able to honor a 3-year warranty.
This uncertainty might cost them my business. Their only saving grace is that their primary competitor for my business, HP, is also causing me to doubt.
you have to break a few eggs. Dell is one of the american computing greats, and it would be a very sad day to see it taken over or file for bankruptcy. So in order to turn a company with more money leaks than a welsh allotment, you have to fire people and rearrange departments. Apple did it in 1997, Microsoft will do it in the next few years (hopefully), IBM's been doing it since IBM made computers. If Dell wants to become more than just a hardware manufacturer and OEM for Windows, they need to cut back and re-evolve. I have great expectations of Dell since it's gone private. I hope my expectations are realised...
If you gave me a choice between a printer and a giraffe with explosive diarrhoea, i'll get my ladder and my raincoat
The head of engineering at a former job told the crowd after a nasty layoff "We are ALL temporary employees" several times over.
Get used to it. In most jobs your loyalty is purchased in 2 week increments. Check your contract, or rather your lack thereof.
I was considering the Venue 8 Pro for a while before going with a Lenovo Yoga 2 Pro after changing my view on what I wanted/needed for on the go (yeah I'm bucking again't the trend).
Now with this happening I'm glad I didn't purchase from them. No way I'd appreciate this sorta stuff after plucking down my hard earned cash for their products.
The rumor of the PC's impending demise as people's primary computing/communicating/wossname device?
A feeling of having made the same mistake before: Deja Foobar
numbers will be north of 15,000
Has the writer never seen an Australian map?
Garry Knight
Ex stockholders should sue Dell
15,000 salaries x $30,000 per year = $450 million a year savings!
If these cuts had been made before the buyout, the stock would have rocketed UP!
By keeping the 'dead weight' on the books, Dell swindled the ex-stockholders out of BILLIONS. For example, 450 million a year in profits/savings at a ten percent cap rate = 4.5 BILLION of market value!
Historical cap rates (how stocks are valued) are higher, so this analysis makes the crime look less damaging to the losers/former owners.
This is slanted wrong. Public companies have share holders to answer to. They've sold their soul to the devil, AKA: Share holders who almost always buy shares to make money.
A private holder, a guy who is already rich, he can do what he wants. Maybe try to make money. Maybe try a long term growth strategy that won't make money for a few years. Maybe keep people on the payroll who should be layed off now, just so they will be ready to go to work in 6 months. I'd be way more critical of what public companies do to make money than I would be critical of private companies.
There are quite a few examples of privately held companies going the extra mile for their employees at the expense of short term profits.
"They that give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety"-B.Franklin
Does this surprise anyone? It really should not considering the dismal PC industry of the last couple years. What is happening is the PC industries believes the future in profits from hardware is gone. I think many PC makers already believe many consumers and even enterprise will look to inexpensive low impact hardware and that does not provide much profit margins for PC makers. I seriously look at cheap tablets and Chromebook like device and wonder if these become the go too device. Who exactly will make any money on them? The reason for lousy support and poor quality is that more and more buyers want cheap over anything else. The big loser in all this will eventually be Apple. The justification for a $1000 plus notebook is dwindling.
So much for your rant about capitalism.
maybe a house in austin will be affordable again
http://en.wikipedia.org/wiki/Malden_Mills
"The Malden Mills factory burned down on December 11, 1995. CEO Aaron Feuerstein decided to continue paying the salaries of all the now-unemployed workers while the factory was being rebuilt. By going against common CEO business practices, especially at a time when most companies were downsizing and moving overseas, he achieved recognition for doing the right thing"
"They that give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety"-B.Franklin
There's a shortage of workers in the technology sector! Pay no attention to these technology companies purging employees. I've been watching this since about 2010, and the list grows ... and grows ... and grows. There should be enough unemployed technology-sector workers to fill all available jobs. Oh, right, they won't get jobs because they're not trained in some niche technology, and if they learn it themselves they won't have experience. Isn't it great when the other team can move the goalposts and you can't?
more than than we even guesstimated? http://rt.com/business/us-unemployment-economy-crisis-assistance-006/
Dell is a private company now. If you're going to rant about how evil the market is please at least try to keep up with current events instead of vomiting up the same garbage over and over.
I feel sorry for the 15,000 workers about lose their job, Dell is walking a thin line and Michael wants to make sure that the company that bears his name stays around. Dell has become a bloated pig and unfocused. They are also not responding to customers demands where they should and expanding into markets that support their core strengths.
Bearded Dragon
to lay off 100% of work force.
Yes it sucks for the 15,000 that are going to get laid off, it will also suck for the remaining 85,000 plus all of Dells partners if the company goes completely under. The past 20 years have seen numerous large and small PC companies go under. This is what Dell has to do to survive.
I'm probably considered left of center on quite a few fiscal issues but the slant in this article is pretty pathetic.
maybe a house in austin will be affordable again
Compared to most of America, in fact the Western world, its pretty affordable anyway.
IBM just sold off its x86 server business for $2.3 billion!
Looks like Mr. Dell and Silver Lake maybe overpaid by just a little...? Of course, they have some other stuff like Oracle utility software... I'm sure that makes up the difference.
They should fire everyone who makes their awful computers. That would be a great way to start.
Why don't you go lick the balls of you favorite CEO. Just because the market is shrinking, doesn't mean you have to fire people.
Have you seen the numbers? Do you understand the numbers? I can say i haven't seen them, but obviously neither have you, so this reply is more of a general nature.
Yeah, before you need to fire people, you can either do something about the bad market (is it the companys own fault, maybe it's just people don't want to buy from that company or is it a fluctuation that also conserns rivals), or do some R&D for the next wave or start doing something else than the core business also.
Mass firing people will not make the market better (people get pissed and now a lot of them can't afford to buy your stuff), it will not make you products better for the future, also if the market will be going down anyways (i.e. that product is really obsolete, like horse pulled wagons for personal transportation is today), just hanging on to that dead market will kill the company too.
So are you so sure, that mass firing is the right way to go in this particular case?
Wow I bet this will make their stock price go way up!
Some drink at the fountain of knowledge. Others just gargle.
We were notified that our support phone number was being changed. When I called it, I was sent to a call center in India where it took me half an hour to get a return label sent out. We had a replacement part shipped to us the previous week but there was no return label included so I was calling to get one.
Half an hour to get a label sent out. Pathetic.
I guess it's just another example of private industry doing it better than the government.
We will bankrupt ourselves in the vain search for absolute security. -- Dwight D. Eisenhower
John Tortarella, coach of the Vancouver canucks. He did something douchey in a game break a few weeks back and got in the news.
Of course, with a private sponsor in charge of the recently public company, the only thing that matters now is maximizing cash flows
Isn't this the reverse of the usual argument? That publicly traded companies have a duty to maximize cash flow but private companies can choose to maximize tinker toys per desk ratio.
... with a private sponsor in charge of the recently public company, the only thing that matters now is maximizing cash flows. ..
I'm going to assume the author meant "recently private company", and "maximizing revenue" as this would be the only way that sentence would make sense. Of course, even after the corrections, the author is still wrong. The major problem with public companies is that shareholders only care about relatively short term profits. This usually narrows the focus of any business to doing whatever makes this quarter better than last quarter. Being private is a huge advantage precisely because it allows you to look at the bigger picture beyond short term profits. Terrible summary.
If it ain't broke, don't fix it.
Lose you job? Blame a democrat. Blame Obama.
This was announced a month ago and several of my colleagues took the package. The people who took the package already know they are getting laid off. That was their choice! They took the risk of having to look for another job. Some have already found other jobs and are making a lot more now. The severance package is very decent too. To call this a "bloodbath" is just horrible journalism.
Also, this isn't something new. Dell, as a company, did the same thing a few years ago. This time, there are a lot more employees who were eligible for the voluntary separation. It's a great opportunity for the employees who no longer like where the company is going, and would rather work somewhere else.
IMHO, schwit1's summary is a typical leftist rant that assumes that every job position in the company is valuable and should be permanent even if the company is bankrupt. To that I say "Should the people who used work on the incandescent light bulb production lines still be allowed to make them?"
And by "tried" I mean they came out with pathetic knock-off products, be it of the iPod, the MacBook Air, or the iPad. They were all day-late, dollar-short products.
And any time they did come up with something interesting and novel, it was smothered by suffocating Dell bureaucracy.
2 months pay (WARN ACT)
2 months of subsidized COBRA insurance
1 weeks pay for every year with the company on top of the WARN act (most companies don't do this)
75% of your bonus. most techies get an 8% bonus.
They are going above and beyond what is required by law.
I bet that as with any large corporation, Dell is management heavy, and as usual, they will not get rid of many, if any, management positions. I have seen this in other places, and rather than consolidate upper management positions, getting rid of people making tons of money, they get rid of line workers, who make the least money. Why they do this is beyond me.
Dell Venue 8 pro with full 8.1 and Office included for $229. No better deal on the planet. Call us when you have a company, are losing money, and keep everyone on board by cutting your own salary to zero and spending money you do not have.
Austin may be more affordable than the ridiculous prices on the coasts or in Europe, but compared to other midwestern cities, it's not that great. On that page you linked, "The Guadalupe Plan" is $256,490 (base price, any options are extra) for 4 bedrooms and 2.5 bathrooms, 1800-ish square feet, new construction. I just paid $204,000 (not base price, this has quite a few upgrades) for a 4-bed/2.5-bath, 2100-ish square foot new-construction house in a suburb of a different midwestern city.
Austin has had greater success in drawing corporations to the area than the city I live near, but that translates to a higher cost of living in Austin. My wage increases due to Austin's (and the rest of the US's) success, so I live better anyway. That whole "rising tide raises all ships" thing does actually work at a macroeconomic level.
This is why there is so little discontent in the "red states" or "flyover states" in the midwest US. Sticks and stones... We have more bread and fewer circuses. When we want more circuses, we go to a coastal area for a vacation. And everyday midwestern life can be pretty cushy if you're responsible with your money. If you're not, then you typically end up in the impoverished urban areas, where the discontent grows more readily and the bullets take flight nightly. But make no mistake, you don't have to be born rich to escape that fate. I grew up poor, but handled what little money I had well. I can't imagine being able to do that on either of the coasts as comfortably as I've done it here.
Ben Stein had an interesting column objecting to these buyouts.
http://www.nytimes.com/2006/09...
The gist is that management has a fiduciary duty to shareholders, and if they know of a better way to make money for the shareholders, their obligation is to do just that.
Withholding that from shareholders and using that information to enrich themselves violates this duty.
I don't understand what role 'taking the company private' plays in their restructuring plans or why it couldn't be accomplished as a public company.
Jesus, the summary's written like an indictment of capitalism. "The only thing that matters now is money", as if that weren't the stated purpose of every company. Dell's not a charity created for its employees. And even if it were, can you argue that this wouldn't be in the best interest of the remaining ones, so that the company still exists a few years from now?
I get the whole Let's-hate-on-private-capital bent. Sure, Mitt Romney was a tool. But you're really not helping your credibility with this Corporations-are-evil hippyism.
Evidently, the key to understanding recursion is to begin by understanding recursion. The rest is easy.
SW: infinite margins on shrinking marketshare. Expensive to compete with 'free'..
PC's: smaller, faster, so cheap they're disposable.
Tablets: as above, but more so.
Servers: smaller, faster, cheaper.
Storage: ever larger, ever faster, nobody deletes anything.
I think I'll work in storage - for now.
Organization? You must be joking..
Could someone help me figure out how to mod this story as flame bait?
Seriously. Claiming that only private companies can "get away with doing this" is so ridiculous that it can only be construed as an attempt to rile people up.
We should learn what we need to know about issues, before we decide what we need to feel about them.
Dude!, You're Gettin' a DELL PINK SLIP!
"Anything that must happen eventually should happen immediately."
Eventually every person dies, so are you suggesting a campaign of infanticide?
>>In your economic model, is it the case that stupid creditors grow on trees?
Yes. Exactly this. Did you miss the S&L crisis? The LBO/Junk bond crisis? The most recent financial crisis fueled by Credit Default Swaps and Mortgage derivatives?
The "Private Equity" schtick is the same. You lever the company with massive debt, issue dividends to the investors and leave a zombie behind.
This happened to the entire upper mid-west, first with companies which had tangible assets to take loans against (manufacturers) and later with companies with intangible assets (financial companies, IP and the like).
Michael Dell is almost certainly still a true believer, wanting to restructure his company. But he's made his deal with the sharks and will be eaten alive.
This place has become nothing more than the studio audience of The Daily Show or Bill Maher. Someday you children will grow up and get mad when it's your money the government pisses away while doing stupid shit and overstepping their Constitution-mandated authority.
What's with all these damn layoffs?!!!!!!!!!!!!!!! Economy getting better my ass!
that's what us IT workers don't want to be looked at
you keep your filthy indian/chinese gook shit in your own country, and stay the fuck away from mine
Small quip here, those are H-1b visas, not H1-B visas.
...a pink slip!
http://www.zerohedge.com/news/2014-02-03/dude-its-going-be-bloodbath-newly-private-dell-fire-15000
Dell has come out and said 15k is bogus and it's just a few folks:
http://www.channelregister.co.uk/2014/02/03/dell_disputes_layoff_numbers/
Dell had stated before he took the company private that he intended on entering new markets with a greater focus on services rather than hardware. Well, those are different skill sets. You can't just take a hardware guy and turn him into a software guy. Or vice versa. The other aspect, which I'm sure Dell is well aware of, is that the company is bloated in the middle management layer. Like just about every other big company out there.
What's interesting to me is not so much the layoffs themselves but where the cuts occur. Will he actually take the opportunity to get rid of some of the belly fat or will the dead wood continue to remain? Time will tell.
That'd mean he'd have to be unemployed as well...
Michael Dell - The worst CEO/co-CEO/whatever in the history of tech. Hands down. Even worse than Steve Jobs.
Why would this be a surprise? A big reason to do an LBO is so you can cut all the fat away without having to soothe shareholders. The private stakeholders are focused on getting a huge return when they bring the company public again in 5 years