To cut costs, Dell asks workers to take unpaid leave

Dell employees received a memo from founder and CEO Michael Dell recently asking them to take some time off without pay.

It's not meant to be punitive, but rather a measure to help the Round Rock, Texas, company save some money as the economy continues on its uncertain path. The request made to employees is also an effort to avoid possible layoffs, according to a report in the Austin Business Journal.

A Dell spokesman confirmed the memo's existence and said that it was part of a wider program of cost saving that had been instituted. Besides offering one to five days of unpaid leave, the company has also placed a temporary freeze on new hires, eliminated contract employees, and offered severance packages to workers to leave voluntarily.

Though Dell recently met its goal of cutting its employee rolls by 10 percent, the memo stated that more layoffs could be coming if these cost-cutting measures didn't achieve the desired results, which Dell did not specify.

The company recently reported a 17 percent dip in earnings after a year of showing signs of good growth.

[Galaxy5]

That's the same thing Apple did in 1996. Two years later, the company was nearly out of business.

See the parallel? Not good news for Dell.

[scarface74]

Apple's market cap -- 98.6 Billion
Dell's market cap -- 25.32 Billion

Michael Dell should close the company and return the money to the shareholders.

[catch23]

Following advise like that, Apple would have closed its doors a long time ago.
Businesses rise and fall. Apple may be a ghost of itself in 5 years. Or gone completely.
Dell may vanish or dwarf Apple is that time.
If you don't stay in, you don't know.

[rocketjam--2008]

@catch23-
That's the advice Michael Dell gave to Apple in 1996. I think scarface74 is pointing out the irony.

[Galaxy5]

Yes, business is cyclical - especially when you're selling commoditized goods, like cheap PCs. My point above is that when a company's beancounters start asking employees to take unused time off, it's because the company is trying to minimize liabilities on the balance sheet.

Apple's focus on design, polish, and differentiation has allowed them to minimize their exposure to the economic downturn so far.

The point is that Dell has never been anything more than a re-marketer and packager of low-priced PCs, which hurts them even more when economic hard times put severe downward pressure on prices. Apple actually designs products from the bottom up to be novel, useful, and to furnish a decent profit for the company. Apple doesn't have to sell as may computers as Dell to make the same money, and Apple customers have already demonstrated a willingness to pay a little extra for the higher value of an Apple product.

[Vegaman_Dan]

Dude! You got a pink slip!

[Canberra-photographer]

Time for Dell to shut its doors I'd say. They haven't had anything innovative in years.

[alan_06]

I think it's a good move to ask their employees to understand the situation and volunteer if possible.
It's not a direct result of the company's performance but the overall downslide in the economy.
Computers are not an absolute necessity for day-to-day life and people would definitely hold buying costly items during this time. I don't think even heavy marketing would convince people to buy.
Dell is not alone anyway,lots of fortune 500 companies had taken unexpected sharp dive in recent months wiping their values in billions.

[inachu]

I've been taking unpaid leave since 2000.
Nice how the IT industry does not like to hire full timers anymore.
This "chew you up/spit you out" mentality will one day bite back.

[sderf]

I wonder if those folks can ask the grocery store, electric, water, gas companies to do the same for them.
Yeah right

[JB89147]

What about the outsourced call centers what are they going to ask them to give back to the company?

[baddog_nobone]

I'm embarrassed to work for a company that has one of the World's richest men asking its employees to take 5 days unpaid leave. Some of these people are barely making ends meet as it is. Our insurance rates skyrocketed for FY2010 and many are stating they're not sure how they'll manage. Yes, boohoo I know. They hired that crackpot Don Carty and gave him a HUGE "incentive" for screwing it up even further. Yes, the company is bloated, but for crying out load... I haven't even seen Michael Dell and I've been there over 5 years! Is that a good example of a leader who is in touch with his employees?

Bad decisions and bad leadership. Time to humbly beg for an Apple or HP job application.

I'm gonna bet that the Dell leaders will not forfeit their bonuses this year.