Dell announces revenue and cost actions to halt decline

Friday, September 15, 2006 

Dell's share price has been in a sharp decline as the company has struggled to deal with declining PC and server revenues. Now it has been forced to delay its 2Q financial report as it deals with state and federal accounting investigations. Dell revealed last month that the SEC was looking into its past financial statements. As a result, it has been forced to put its stock buyback programme on hold until the market can be confident the share price is right. To correct its course, Dell has also announced in the past week:

Plans to outsource more services as it expands around the world

Dell intends to be less US-centric, and to build new plants in regions such as central Europe, Brazil, China and India. Under the Dell 2.0 roadmap, the company will also provide fewer services in-house.

Spend $150m on improving customer satisfaction

Dell said this week that customer satisfaction is something that it had not done perfectly in the past. "We made a decision six to 12 months ago, because we weren't pleased with our internal and external satisfaction indices," said a Dell general manager. Dell has also reduced its supplier base, to "reduce variability in component quality", according to CEO Kevin Rollins. The company will also focus on product design, another aspect that Dell has been accused of neglecting in the past.

Sources

• Tom Espiner. "Dell to spend $150m on keeping customers happy" — Silicon.com, September 13, 2006
• Matt Chapman. "Dell looks to outsourcing to drive expansion" — vnunet.com, September 12, 2006
• Ashlee Vance. "Probe into Dell accounting widens" — The Register, September 11, 2006