Dell lays off 600 employees in Europe

Bernhard Warner

LONDON: Dell Computer Corp. said on Friday that it had laid off 600 employees

in Europe during the past quarter as part of its plan to reduce its global

workforce by 3,000.

The affected staff had accepted voluntary layoff packages during the second

quarter, Paul Bell, president of Dell's Europe, Middle East and Africa

operation, told Reuters. Most were in Ireland and the U.K.

In Germany, Dell is hiring 120 staff to bring its total German workforce to

800, a company spokeswoman said. The jobs would be in the areas of sales and

support at the company's Langen office, the spokeswoman added.

No more staff cuts were planned for the rest of the year in the region as the

company braces for the fourth quarter, traditionally the strongest for the

industry. The company is hoping for a turnaround in the sagging PC industry in

early 2002.

The Texas-based computer maker has been affected by slowing global demand for

PCs and industry-wide price cuts. It reported on Thursday a loss of $101 million

on flat sales of $7.61 billion for the second quarter. The loss was due to a

onetime charge, primarily associated with staff reductions and plant

consolidations, most of which occurred in the US.

In Europe, PC sales fell by two percent for the quarter. Bell said Dell's

sales in Europe jumped by 25 per cent in the same period. On Thursday, Dell told

analysts’ third quarter sales would be 10 per cent lower than the year-earlier

quarter. Still, further price cuts on PCs are being ruled out for now, Bell

said.

The price cuts on PCs had been triggered largely due to suppliers reducing

component parts in order to clear out inventory. "That was one of the major

drivers of our price reduction," he said.

Dell's build-to-order business model has enabled it to keep a bare bones

inventory level and consistently the most competitive prices in the industry.

Bell stated that it would continue to "price aggressively", a tactic

that has helped it secure top market share in Europe, but said there was no

pressure to continue dropping prices. "Our margins have hit a point where

we feel we can stay with the same pricing structure," he said.

(C) Reuters Limited 2001.