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Dell Hurt by Weaker Tech Spending

By Reuters  |  Posted 09-16-2008 Print Email

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With tech spending and demand down, Dell will be forced to realign operations and possibly lay off more workers.

Dell customers are cutting back further on technology spending, the company said on Tuesday, sending the computer maker's shares down more than 7 percent.

Dell, the second largest computer maker after Hewlett-Packard, has already been hurt as buyers hold back on purchasing decisions. It posted a steep drop in second quarter profit in August, saying that companies are becoming more conservative.

"The company is seeing further softening in global end-user demand in the current quarter," it said on Tuesday.

Dell expects to incur costs as it "realigns its business to improve competitiveness, reduce headcount and invest in infrastructure and acquisitions."

In August, the company said it had cut 8,500 jobs out of a planned 8,900. At that time, at least one analyst said the quarterly results could presage further cutback.

Dell shares were down to $16.60 in pre-open trade on Tuesday after closing at $17.99 on Nasdaq on Monday. Shares in Dell, which first warned in May that U.S. companies were becoming cautious, are down about 27 percent so far this year.

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