Thursday 25 May 2017

Dell 'won't cut jobs' despite warning of 7pc plunge in sales

Donal O'Donovan

Donal O'Donovan

COMPUTER giant Dell has no plans to slow down recruitment or cut Irish jobs, despite a warning by the company that global sales will plunge by 7pc in the first quarter of the year.

Sources at the company said a recruitment drive in Ireland would continue, despite the trading warning.

"Recruitment is on-going across a number of business divisions within Dell's operations in Limerick and Dublin at this time," a spokeswoman told the Irish Independent last night.

Dell employs 2,400 staff in Ireland at two large centres in Dublin and Limerick and last year announced plans for further hires as it ramps up research and development (R&D) and specialist customer care in new dedicated business units.

News that recruitment will continue comes after the US-based company shocked the markets with a warning that it expected sales to fall sharply in the first three months of this year.

Dell said sales would be down 7pc this quarter from the previous quarter, when it posted revenue of $16bn (€12bn).

In New York, shares in the firm plunged 6pc in the wake of the news yesterday -- the biggest fall for four months.

Sales are being hit by lower-than-expected demand for personal computers from consumers and governments.

Dell is suffering from competition with Apple at the high end of the market and Lenovo and Acer at the low end, Shaw Wu, an analyst at Sterne Agee & Leach, wrote in a research note earlier this month.

Chief executive Michael Dell, who retook the reins of the company in 2007, is making deals and adding new products in a bid to revive growth and focus on more profitable areas.

Sales to large corporations, however, were up 5pc in the last quarter; sales to small and medium size (SMEs) businesses were up 6pc, the company said.

US bank Citigroup downgraded Dell shares to "neutral" from "buy" after the announcement.

Citi said Dell could see more volatility in operating margins and earnings going forward.

After an almost 25pc gain in Dell's shares this year before yesterday, some investors could have been overly optimistic about the company's ability to turn around its operations, said Brian Marshall, an analyst at ISI Group in San Francisco.

"The ship is so big that to move the needle is a herculean feat," said Marshall, who has a "neutral" rating on the shares. "Expectations are way too high."

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