Dell temps get marching orders, analysts predict layoffs

The Round Rock, Texas-based computer maker could also soon start paring the number of permanent employees, say analysts and sources close to the company.

Spherion, a Fort Lauderdale, Fla.-based staffing firm, said on its earnings conference call Thursday that a large, Austin, Texas-based company cut back its fourth-quarter temporary staff from 3,200 to "under 2,000 per week as orders slowed dramatically." Round Rock is a suburb of Austin.

Analysts who follow Spherion said that the company was clearly referring to Dell (dell), which uses it for temporary staffing.

Dell spokesman Mike Maher said the company is looking to cut costs where it can. He said the company has cut its temporary staffing, but he could not say whether Dell was the company Spherion was referencing.

"We have scaled (down) our temporary work force in line with our demands and the seasonal nature of the needs in (that) area," Maher said.

Analysts, however, say it won't stop there.

Ashok Kumar, an analyst at U.S. Bancorp Piper Jaffray, said Dell is aiming to cut 8 percent from its operating expenses.

Dell spokesman T.R. Reid would not comment on exact cost reductions or layoffs but said that Chairman Michael Dell has signaled that "we are going to even be more aggressive in reducing operating expenses."

David Bailey, an analyst at Gerard Klauer Mattison, said such cuts "could include head count reductions."

Other PC makers have already announced job cuts. In January, Gateway (gtw) said it will cut more than 10 percent of its work force, or roughly 3,000 employees. Hewlett-Packard (hwp) said last month that it will trim 2 percent of its staff, or about 1,770 workers.

Dell warned in January that its sales and earnings will fall below its prior forecast. Dell now expects earnings of 18 cents to 19 cents per share, compared with earlier estimates of 26 cents per share. Sales are expected to be $8.5 billion to $8.6 billion, down from its earlier expectation of $8.7 billion. Dell will report earnings Feb. 15.

Employee attrition based on performance evaluations will likely begin soon at Dell, according to sources. Dell reviews employees at the close of its fiscal year, which ended Friday, and rates each on a scale of one to five, with one being best. Those employees given a "four" rating will be let go, according to sources close to Dell. In the past, those given a "four" rating were often given a period to improve. Although the scale goes to five, that score is rarely given and almost always leads to termination.

Even if Dell lays off a few thousand employees, it would barely put a dent in the growth the company has seen in the past few years.

Dell had 16,200 workers in January 1998, 24,400 in January 1999 and 36,500 in January 2000, a representative said. The company currently has about 39,000 employees.

Staff writer Michael Kanellos contributed to this report.

Dell Computer has cut back on its temporary work force as the PC giant seeks to cut costs amid a sluggish market.

The Round Rock, Texas-based computer maker could also soon start paring the number of permanent employees, say analysts and sources close to the company.

Spherion, a Fort Lauderdale, Fla.-based staffing firm, said on its earnings conference call Thursday that a large, Austin, Texas-based company cut back its fourth-quarter temporary staff from 3,200 to "under 2,000 per week as orders slowed dramatically." Round Rock is a suburb of Austin.

Analysts who follow Spherion said that the company was clearly referring to Dell (dell), which uses it for temporary staffing.

Dell spokesman Mike Maher said the company is looking to cut costs where it can. He said the company has cut its temporary staffing, but he could not say whether Dell was the company Spherion was referencing.

"We have scaled (down) our temporary work force in line with our demands and the seasonal nature of the needs in (that) area," Maher said.

Analysts, however, say it won't stop there.

Ashok Kumar, an analyst at U.S. Bancorp Piper Jaffray, said Dell is aiming to cut 8 percent from its operating expenses.

Dell spokesman T.R. Reid would not comment on exact cost reductions or layoffs but said that Chairman Michael Dell has signaled that "we are going to even be more aggressive in reducing operating expenses."

David Bailey, an analyst at Gerard Klauer Mattison, said such cuts "could include head count reductions."

Other PC makers have already announced job cuts. In January, Gateway (gtw) said it will cut more than 10 percent of its work force, or roughly 3,000 employees. Hewlett-Packard (hwp) said last month that it will trim 2 percent of its staff, or about 1,770 workers.

Dell warned in January that its sales and earnings will fall below its prior forecast. Dell now expects earnings of 18 cents to 19 cents per share, compared with earlier estimates of 26 cents per share. Sales are expected to be $8.5 billion to $8.6 billion, down from its earlier expectation of $8.7 billion. Dell will report earnings Feb. 15.

Employee attrition based on performance evaluations will likely begin soon at Dell, according to sources. Dell reviews employees at the close of its fiscal year, which ended Friday, and rates each on a scale of one to five, with one being best. Those employees given a "four" rating will be let go, according to sources close to Dell. In the past, those given a "four" rating were often given a period to improve. Although the scale goes to five, that score is rarely given and almost always leads to termination.

Even if Dell lays off a few thousand employees, it would barely put a dent in the growth the company has seen in the past few years.

Dell had 16,200 workers in January 1998, 24,400 in January 1999 and 36,500 in January 2000, a representative said. The company currently has about 39,000 employees.

Staff writer Michael Kanellos contributed to this report.