Dell to cut 10 percent of workforce

Dell will lay off 10 percent of its workforce over the next year as it works on its Dell 2.0 reinvention.

Dell will lay off 10 percent of its workforce over the next year as it works on its Dell 2.0 reinvention.

The company, which recently announced a deal with Wal-Mart and plans to sell Ubuntu PCs, said Thursday the job cuts will vary across regions, customer groups and business functions.

For its fiscal first quarter Dell reported earnings of 34 cents a share on revenue of $14.6 billion. Wall Street analysts were expecting earnings of 26 cents a share on revenue of $13.9 billion.

Judging from those results CEO Michael Dell is doing something right although it's still early in the company's turnaround plans.

For instance, Dell is still working on filing its annual report and it had expenses of $46 million due to an ongoing financial reporting and accounting investigation.

Nevertheless, Dell is making progress. It said it improved customer satisfaction ratings for its technical support. And Dell saw a 66 percent decrease in the number of times customers are transferred before a problem is fixed.

In addition, Dell has been smarter about pricing. By focusing on its product mix it improved profit margins even though sales were only up 3 percent from a year ago. Dell's server revenue was up 19 percent compared to a year ago to $1.6 billion. Desktops took the biggest sales growth hit with revenue falling six percent from last year to $4.9 billion.

As for the outlook, Dell still has some work to do. The company said:

In the second quarter, operating margins will be under pressure sequentially as the company enters the seasonally slower quarter with elevated operating expenses and additional costs related to the ongoing investigations. In addition, results for the year could be affected by additional transformational actions, changing competitive dynamics, a more aggressive pricing environment and higher component costs in the second half of the year.

Dell said the Securities and Exchange Commission's accounting investigation into Dell is ongoing. Dell added it will update as needed as the investigation is concluded. When the investigation is completed Dell will file its annual report and two quarterly reports. The company also postponed its annual shareholder meeting.