Report: Dell layoffs this week – 15,000 to be hit | Hacker News Reader

Report: Dell layoffs this week – 15,000 to be hit

zdnet.com

45 pointsuladzislau45 comments

This is not surprising. Michael Dell spent billions to take the company private because he believed the company was undervalued and under-performing[0], and that he knew how to save it, not because he was content with leaving it the way it was.

That process necessarily involves personnel changes - if anything, I'm surprised we didn't see these sooner.

The real question will be who they're cutting (and more importantly, who they'll be replaced with, or if those positions will be replaced at all).

[0] The other reason public companies go private is to liquidate, but that's clearly not his goal.

It'll be interesting to see how development is affected. Dell has had a reputation of being the place to work if you wanted a high salary with minimal responsibilities here in Austin. I've heard the politics are brutal, though.

There were similar comments in the Nashville subreddit recently, I was surprised with how flippant people were.

That sounds so different from their office in Porto Alegre, Brazil. It's a sweatshop there. I know a number of people who work/have worked there and they all say it's awful.

>>Dell has had a reputation of being the place to work if you wanted a high salary with minimal responsibilities here in Austin. I've heard the politics are brutal, though.

When you can't justify yourself by demonstrable quality output, office-politics comes in.

The changes probably more to do with the replacement of laptops/desktops with smartphones/tablets. Joe Sixpack doesn't have as much use for Wintel as he did in 1998.

Probably it's not that they don't need people, just that they don't need so many expensive people in the US (other than execs, of course)

They have 108.8k employees [1], so this represents 13.8% of the company.

[1] http://en.wikipedia.org/wiki/Dell

More than I thought. Nice. Well, nice in an "interesting things to come" sort of way.

Interesting. That's roughly a computer a day per year per employee. Assuming $40k / year per employee, that's $111 bucks per computer of employee cost. Hirer than I thought.

They sell more than computers though. Monitors, printers, servers, storage, support, etc etc.

More than a decimation, wow.

I feel bad for anyone who didn't see the writing on the wall when Dell was initially acquired. Large-scale layoffs are a key tool for private equity firms when they take a company private. Indeed, if Dell didn't have a lot of fat to trim, it would have been a much less attractive takeover target in the first place.

How are they not triggering the WARN act? 15,000 is a lot more than the 100 that it requires.

The Worker Adjustment and Retraining Notification Act (WARN) protects workers, their families, and communities by requiring most employers with 100 or more employees to provide notification 60 calendar days in advance of plant closings and mass layoffs. [1]

I assume Dell is dealing with the WARN act's 60 days notification by including 60 days paid leave in the severance package. The article says that "the severance package includes two months' pay plus an extra week for each year in Dell's employ, a bonus at 75 percent, health insurance for 18 months in the U.S. and some outplacement services at least stateside."

[1] http://www.dol.gov/compliance/laws/comp-warn.htm

That's a crazy amount of COBRA/health insurance severance. Not saying its a bad thing, you just don't see it that often.

As an ex-employee, you're entitled to the 18 months by law. The difference here is that Dell is apparently paying for it, not the employee (although maybe that's what you were referring to as the "crazy" part).

> although maybe that's what you were referring to as the "crazy" part

Yes. To be frank, in my mind, that offsets a lot of ill will toward the layoffs. Sure, you're getting let go. But you'll have almost 2 years of health insurance paid for, and unemployment for at least a year (plus severance).

Not that bad of a deal.

Yeah, that's a whole lot of cash to be paying out, especially times 15,000! Even over two years, its a LOT.

Has to be at least $100 million I'd think, possibly even just in the insurance cost alone, not to mention the direct severance compensation too.

Very respectful & respectable package IMO, probably why the news was released on a Monday, eh? ;-)

Luckily for Dell, the health insurance is going to be a straight business deduction.

When operating at thin margins, if those margins disappear the only way to stay afloat is to cut costs. The "easiest" way to cut costs quickly is to reduce your labor force. It is much harder to cut operational costs like buildings and infrastructure without incurring extra cost or taking a big loss.

This is one reason why operating a high margin, low cost business is probably better for both the owners and the employees.

It's curious that the PC model of selling the customers relatively modular systems is rapidly falling by the wayside in favour of highly integrated systems, which at their logical extremes are completely unmodifiable. We've crossed the point at which system integration outside of the SoC is going to get less valuable very fast.

PCs are clearly headed this way too, but it means economies of scale for particular configurations are going to be much harder to come by.

So that's why nobody at Dell responded to my application (already working somewhere else, don't worry).

Wonder how hard this is going to hit the Austin/Round Rock area this time (again).

Dude, you're getting a pink slip!

Your comment also reveals how the only Dell-related ad people can remember is 10+ years old.

The company hasn't changed in ten years. Their notebooks today look virtually the same as those from ten years ago. Maybe a little thinner, plus they come in different colors, but that's about it.

And there's really nothing wrong with that. My old D420 Latitude has really stood the test of time, CPU performance aside.

You can say the same about Apple. Dell still the best workstations, though, unlike HP with their stupid redesigns.

Apple's Mac Pro looks nothing like any computer ever made before, and their new MacBook Retina machines are radically different from their 2004 Aluminum Powerbook models.

I kind of like HP's redesigns, it shows they're trying. The Envy isn't bad for a MacBook inspired knock-off.

We'll see many more layoffs like this in the coming weeks / months as the Fed tapers off. This is macro related.

I am not seeing anywhere that this is due to a lack of demand, but rather due to re-structuring the company.

Can you possibly explain a little more? From my research [1] the fed tapering off looks good for business as stocks skyrocketed according to the article [1]. Personally I think it is good the Fed is tapering off and starting a slow transition (note: I have libertarian views hence less gov't involvement the better). Obviously, I am no expert, maybe someone can explain why it's bad other than the market might not being ready?

[1] - http://www.cnbc.com/id/101282912

I don't think he can explain more. He's basically predicting the stock market without any insider information.

And he's basing it on macro which is even more random.

Fed tapering means there's less liquidity in the markets. That's because they're buying up less risky assets off the financial institutions. Less money in the market means less "free" cash available to be loaned up for risky investments. I wrote a little about this in this submission: https://news.ycombinator.com/item?id=7172139

Of course I can't predict what will happen but it's very clear that less money always means less money. A lot of businesses rely on bank loans to make ends meet with regards to payroll. This might not apply to Dell but it applies to a lot of small business owners who need the extra help until they get paid by their clients and then pay off the short term loan. Stricter payroll loan policies (when money is scarce = bank reaching low levels of liquidity) puts businesses in tough situations leading to sudden layoffs.

The Fed's goal is to try and regain control of the system (they lost control last summer). So by tapering they're shaking the tree. Just like you'd put an electrical signal through a black box and study the output in an attempt to understand how it works, the Fed is gradually cutting its $85bn per month supply of "cash."

That's what the Fed (Yellen) is doing right now. I'm sure they'll react if things degenerate too much.

FYI, it's a carnage in the financial markets right now. Dow was down several hundred points in Jan. Several hundred points just today.

... Except the Fed is mainly buying Treasury debt. It actually encouraged loaning out for "risky" investment by pushing down interest rates. That's why there's the fear in emerging markets as the program winds up.

I think it's related to the recent crappy weather. Correlation and causation and all.

Well, the weather is good in some places. It's because of the recent good weather! No, it's because of the simultaneous good and bad weather in different parts of the country!

The weather has been pretty bad in the parts of the country where most people live.

I don't know how you conclude that - evidence please. Seems more likely that these are cost cutting measures taken to trim costs as part of the private equity restructuring, and the fact that their products are not being exactly welcomed in the marketplace.

They just did a leveraged buyout. This is not macro related.

Emphasis on the leverage part. Interest rates matter, a lot.

Probably all swapped or funded at fixed rates. You don't do an LBO and then go bust when rates rise. You still need to refinance but the assumption is you have made cost savings, sold stuff and reduced leverage by then.

Unfairly down voted. Although I understand no one wants to hear bad news. Let's do this: meet me here in May/June and we'll see if my "prediction" of the effect of continued tapering is somewhat accurate. Here's the crux of it:

1) More layoffs in different sectors of the economy

2) Less VC funds to go around

3) Main street feeling the brunt of it

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