Dell Will Continue To Cut Costs; Needs To Drive Revenue
Austin American-Statesman , Friday, February 27, 2009 10:45 AM
In announcing that fourth-quarter sales fell 16%, Dell says it is intensifying its focus on cutting costs to remain competitive with rivals, mostly by reshaping its supply chain and manufacturing network. Additional jobs will be cut, too.
But Dell can't rely on slashing expenses forever, says John Spooner, an analyst at Technology Business Research. The recession has obscured how much it has improved its competitive position against H-P and other rivals, he says, and as technology spending recovers, the success of the company's turnaround plans will be measured more by revenue increases than expense reductions.
For now, Spooner tells Dan Zehr, Dell's sales push ought to focus on higher-margin products. But that's easier said than done in this economy. "The customer base they're selling to is really focused on cost reductions," Spooner says. "They want the least expensive equipment they can get to do the job."
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But Dell can't rely on slashing expenses forever, says John Spooner, an analyst at Technology Business Research. The recession has obscured how much it has improved its competitive position against H-P and other rivals, he says, and as technology spending recovers, the success of the company's turnaround plans will be measured more by revenue increases than expense reductions.
For now, Spooner tells Dan Zehr, Dell's sales push ought to focus on higher-margin products. But that's easier said than done in this economy. "The customer base they're selling to is really focused on cost reductions," Spooner says. "They want the least expensive equipment they can get to do the job."
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