Dell To Cut $2 bn Costs, Counts On Acquisitions

Software and services are a key growth area, Dell executives told analysts. The corporate software and services business is on track for average annual growth of 10 percent until fiscal 2016, it said.

The PC maker has been actively snapping up companies as it tries to diversify away from personal computers, a market where growth is decelerating as Apple Inc’s (AAPL.O) iPad and other mobile devices pull consumers away.

It has acquired eight companies in the past 12 months, including Wyse Technology and SonicWall.

“We have a modest software business and that’s an area where we can grow rapidly,” Chief Executive Officer Michael Dell said at the conference. “We’ve had some nice acquisitions, which are off to a good start.”

Fixing Sales Structure

Chief Commercial Officer Steve Felice said the company is fixing the structure in its sales organisation.

“Too many people were involved in (sales) opportunities,” Felice said.

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He added that Dell is also trying to incorporate the products it has bought via acquisitions into its overall sales portfolio, instead of focusing on them separately.

“The end result of all this is a delayed sales cycle,” he said. “There was a lot of white space that we weren’t properly covering.”

Felice said the company will have to “reposition a couple of thousand” sales-related personnel.

Dell has been diversifying its revenue base in the face of weakened consumer demand, giving up low-margin sales to consumers and moving into higher-margin areas, such as businesses in the public sector and the healthcare industry.

Chief Financial Officer Brian Gladden said acquisitions will continue to be an important focus for the company.