Obama or McCain? The people speak today, but no matter who wins, Wall Street likes the fact that a regime change is underway, and change, by and of itself, is a ray of sunshine on the investment community.
That's why the stock market is up over 200 points and let's hope that the momentum we're seeing can accelerate into the rest of November and December. Don't get me wrong - we're in a world of hurt economically. But so much of what we see in the stock market is based on emotion (and lately, fear) that even the fresh breath of air we invariably get with a new face in the White House is good news.
Of course, tell that to an employee at Dell Computers. The computer giant has already shed 9,000 jobs but that's not going to be enough. Reuters is reporting today that the company is asking employees to think about taking five days of unpaid vacation. Dell is also getting more aggressive about issuing severance packages and has called for a worldwide hiring freeze.
Computer maker Dell, which is nearing the end of nearly 9,000 job cuts, has asked employees to consider taking up to five days of unpaid vacation, is offering voluntary severance packages and has instituted a global hiring freeze.
The company was rocked with huge losses in the second quarter, and the market outlook for its high-end computers isn't exactly rosy. Dell, along with the other big personal computer makers, is losing market share to smaller computer makers making small "netbook" personal computers that often go for under $500. Bank of America analysts Scott Craig says the ascent of smaller PC's couldn't come at a worse time for big PC makers. He has cut his estimates for Dell and HP in early 2009 and has slashed his forecast for 2009 global PC unit growth to 3% from 5%. Overall, Craig thinks PC industry revenue will shrink 11% in 2009.
To his credit, Dell CEO Michael Dell stood up and faced the music himself, sending an email to employees this week that the company needs to cut costs in what is now an all-important fourth quarter of 2008.
According to Dell spokesperson Jess Blackburn, Dell is strictly eying the long term with the five-day paycheck holiday, which the company wants employees to take by January 30, 2009. "The intent is to better position Dell for long-term competitiveness," he says. "We are asking employees on a voluntary basis to consider taking off (up to) five days...as unpaid time off as a flexible way to reduce costs for the company."
To date, Dell has cut 8,500 out of a planned 8,900 jobs. It's turning a lot of its cash toward the Pacific Rim (especially India) and away from the U.S., where company bean counters see the computer market as saturated.
Dell has also pegged $3 billion as the cash it hopes to save by cutting spending via layoffs, buyouts and the paycheck holiday. We'll know by the end of January whether some of those temporary vacations become permanent ones.