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Battered by plunging sales, US tech giant Dell to lay off 6,650 employees

Dell is expected to provide further information on the financial impact of the job cuts when it reports fiscal fourth-quarter results on March 2. (AFP File Photo)

US-headquartered multinational technology giant Dell Technologies Inc., facing a drop in demand for personal computers, is planning to lay off thousands of workers, becoming the latest US tech company to take such a measure. 

The Texas-based company is expected to eliminate about 6,650 jobs, accounting for about 5 percent of its global workforce, a report in Bloomberg said on Monday. 

With this move, Dell becomes the latest American tech company to bear the brunt of the slowdown as the US tech layoffs intensify

The Bloomberg report cited the company's Co-Chief Operating Officer Jeff Clarke writing in a memo that they were experiencing market conditions that “continue to erode with an uncertain future."

“We’ve navigated economic downturns before and we’ve emerged stronger," Clarke wrote to employees. “We will be ready when the market rebounds."

The previous cost-cutting measures, including a pause on hiring and limits on travel, are no longer enough, Clarke said in the memo.

The department reorganizations and job cuts are an opportunity to drive efficiency, a company spokesperson was quoted as saying by Bloomberg News.

Dell reported a 6 percent sales drop in the period that ended October 28 and gave a revenue forecast for the current quarter that fell short of estimates, saying customers were reducing their purchases of information technology.

Technology giants from Microsoft Corp to Inc and Goldman Sachs Group Inc have laid off thousands of workers recently as consumer and corporate spending shrinks due to rising inflation and interest rates.

Layoffs in the United States hit a more than two-year high last month as technology firms cut jobs at the second-highest pace on record to prepare for a possible recession, a report showed on Thursday. 

Microsoft Chief Executive Officer Satya Nadella said in a memo to employees that customers want to "optimize their digital spend to do more with less" and "exercise caution as some parts of the world are in a recession and other parts are anticipating one."

IDC, a leader in IT market research and advisory, says preliminary data show personal computer shipments dropped sharply in the fourth quarter of 2022.

Among leading technology firms, Dell saw the largest decline with 37 percent as compared with the same period in 2021, according to IDC. The company generates about 55 percent of its revenue from personal computers.

Renowned US economist Nouriel Roubini has predicted a severe recession in the United States as the government struggles to curb soaring inflation.

Last year, the number of Americans filing new claims for unemployment benefits rose sharply, pointing to the shrinking labor market amid tighter monetary policies and financial conditions.

Meanwhile, the US Federal Reserve is expected to raise interest rates once more, this time by a quarter point as it continues to fight against high inflation.

The expected quarter-point hike follows a half-percentage point increase in December and would be the smallest increase in the federal funds' target rate range since the first hike of the cycle last March.

According to the US government data, inflation has surged to a four-decade high in the country, as prices continue to climb at the fastest pace across sectors.

The data released by the Bureau of Labor Statistics showed inflation rose to 9.1 percent last summer. The last time inflation surged above 9 percent in the United States was in November 1981. 

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