The world’s third largest PC maker Dell has announced it will give shareholders US$0.08 per share dividend and in a move to maintain giving dividends quarterly, looks to cut costs by US$2 Billion over the next three years.
Dell also announced it is looking to diversify its business away from the PC business, which faces stiff competition from lower-cost PC makers, smartphones and tablets.
According to Dell, its Board of Directors has adopted a dividend policy under which the company intends to pay quarterly cash dividends on its common stock from the third quarter of the current fiscal year.
As Dell executives explained, the majority of the cost cuts will come from the sales group, where the company plans to eliminate about US$800 million in costs.
A further US$600 million in cuts will be in factories and other parts of its supply chain. The remainder of the cost-cuts will be concentrated in service delivery (US$400 million) and its general and administrative spending (US$200 million).
Dell executives outlined how the company will re-invest most of its money in more profitable business lines.
The PC maker is looking to increase sales of software, accessories, networking equipment and data storage. It has recently made acquisitions to boost in the specified areas.
Michael Dell, Chairman and CEO of Dell, explained that the company is an end-to-end solutions provider and it will look to build its data centre, software and services capabilities.
He further said. “We have changed the conversation we’re having with our customers. We are a solutions company first, vertically focused, and creating more value for customers with innovative offerings that provide competitive advantage.”
“We’ve had some nice acquisitions which are off to a good start,” CEO Dell said. “We have a modest software business and that’s an area where we can grow rapidly.”
Dell’s acquisitions include software vendors as well as data- backup company AppAssure. Dell also acquired Network-security company SonicWall Inc this year.
What Michael Dell and the executives didn’t elaborate on is whether the cuts would possibly translate into job cuts globally, including Africa, as it is possible that some sales staff will be cut as part of the exercise to cut costs in Dell’s sales group division.
