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Computer maker cuts costs

Texas-based Dell faces tough market

AUSTIN, Texas — Dell, facing increasing competition from lower-cost personal computer makers, on Wednesday sketched plans for a new program to pare more than $2 billion in operating costs from the company over the next three years.

The Round Rock, Texas-based company, which is reinventing itself to become an “end-to-end” information technology services provider, plans reinvest most of those savings in its new and more profitable business lines, executives said during a yearly meeting with financial analysts.

Dell’s plans are to save $600 million by simplifying its product lines and consolidating its manufacturing operations; $400 million by standardizing its service operations; $800 million through consolidating sales support and consolidating and simplifying its marketing; and $200 million through centralizing its business and consolidating its own information technology platform for internal use.

The plan followed Dell’s disappointing first-quarter results released in May, in which fierce competition for PC sales in emerging markets caused the company to report subpar results with weak profits and falling revenue from the year before.

Company officials did not say Wednesday whether the new cost-cutting will mean job cuts. Dell has expanded its worldwide employment rapidly in recent years as it has acquired new companies, supported their growth and added more specialized sales people to sell more complex products.

The company, which employs about 110,000 people worldwide, now has about 6,600 specialized sales people that sell advanced products, compared with only about 2,000 four years ago.

Jeff Clarke, president of global operations and end user computing, said Dell can make further progress on simplifying its product lines, on consolidating manufacturing and on transporting more products by ship, instead of air freight.

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