Wednesday, June 13, 2012

Dell Cutting Costs

Dell, Inc. is cutting costs to try to stay afloat amid increased competition, Statesman.com reports.  Dell's new program is intended to cut more than $2 billion in operating costs by 2016.

Dell wants to reinvent itself as an "end-to-end" IT solutions provider and plans to put most of those savings in its new business lines, which are more profitable.  They did not say whether the cost-cutting will include jobs. 

The company believes it can grow its traditional end-user computing business to $47 billion by 2016, which was $43.4 billion in 2011.  By focusing on the most profitable product lines, Dell expects more than 5 percent of its operating income to come from the traditional part of their business.

CEO Michael Dell stated that Dell's client business is the most successful at attracting new customers in emerging markets.  The company then works tirelessly to add on to its sales to business customers by selling more leading-edge products, software and services.

Dell continues to buy new companies with technology they can then sell to enterprise business customers.  Dell has spent $10.3 billion so far on this enterprise and those companies have generated $9.3 billion in revenue since they were acquired.  The growth of this segment is averaging around 90 percent annually.

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