'Merciless' Dell prepares for staff cull

Dell has failed to deny cuts are imminent following a number of reports it will have to shed staff to cut costs. A spokesman for the company said Dell is not prepared to comment on rumour and speculation. However, analysts are, and Cnet has quoted a number of industry watchers saying Dell could have to shed as many as 4,000 staff.

Dell, crowned the world's largest PC maker by analyst house IDC, has recently made an aggressive move downmarket to increase market share and boost sales. Yesterday it announced further price cuts, dropping the price of its Dimension PCs by as much as 20 per cent.

It is also now beating Compaq in the war for server sales.

However, while the move has put it ahead of arch-rival Compaq, it has led to sharply falling margins on sales.

Tom Meredith, senior VP of business strategy at Dell, was reported yesterday as saying Dell will be merciless in further cost cutting. He confirmed Dell was sacrificing margins in favour of increased business.

IDC says the worldwide market for PCs showed just 2.8 per cent year-on-year growth in the last quarter, and fell 9.8 per cent in the US market. Dell is the only major PC vendor apart from IBM to have increased its sales on the previous year's figures.