Dell to take $280M charge against Q4 earnings

Dell will book a charge of $280 million in the fourth quarter for workforce reductions and stock option expenses.

Dell will report a hefty charge against earnings when it reports its fourth-quarter financial results at the end of next month, the company announced Wednesday.

Dell will take a pre-tax charge of US$135 million related to workforce reductions in Europe and efforts to streamline its manufacturing operations there. It will also incur a separate pre-tax charge of $145 million related to stock-based compensation, the company said.

The expenses, totalling $280 million, will mean a charge of about $0.11 per share against fourth-quarter earnings, the company said.

The workforce reductions in Europe were announced earlier this month, when Dell said it would lay off about 1,900 workers at a factory in Limerick, Ireland, and move those manufacturing operations to Lodz, Poland.

The changes are all part of a cost-cutting effort announced last March that aims to save Dell about $3 billion by the end of 2011. That effort also included about 8,800 layoffs that were largely completed at the end of Dell's third quarter last year.

The company said it will take additional cost-cutting steps in 2010.

Dell is due to report its earnings Feb. 26.

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James Niccolai

IDG News Service
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