Dell Computer's 5,800 employees in the State will not be receiving a profit bonus for the second time in the last year due to a slowdown in the company's growth.
Workers at the sales and support office in Bray, Co Wicklow, and the three manufacturing plants in Limerick have been told that no profit share bonus will be paid for the November-January fourth quarter because of an increase in component prices and lower-than-anticipated sales in Europe, the Middle East and Africa (EMEA), which are being attributed to the Y2K scare. Corporate customers failed to make the anticipated purchases after the scare subsided.
EMEA production was also influenced by a computer virus in the Limerick operation in November. About 12,000 computers were recalled to check if they had been affected by the Fun-love virus. "We worked very hard and that caused minimal disruption to the business," said Dell Ireland's public relations officer, Ms Annette Condon.
In January, the company issued a profit warning and the following month issued results showing the direct computer sales company had revenues of $6.7 billion (€6.8 billion) for the quarter, up about 30 per cent from the previous year but giving a growth rate for the year which was below the 1998 equivalent. After-tax profits rose by 2.6 per cent to $436 million. Looking ahead to the current fiscal year, the company also warned that it was unlikely to return to its high growth rate of 38 per cent in 1999 and 50 per cent plus in previous years.
But Ms Condon said the company continued to grow as a multiple of the market and now held a 10 per cent share of computer sales in EMEA. It had not reached targets "benchmarked against our own high standards".
She said no profit bonus was paid either for the first quarter profit of 1999 but the scheme was just one element of its employee package. It is worked out on a formula of the percentage of sales in EMEA, the site location of the worker and the individual's productivity performance. "It is a disappointment, obviously, but ultimately it is an incentive which is very much linked to our overall performance throughout the whole European, Middle East and African market."
Dell has 1,200 full-time employees in Bray and a total of 4,600 at its three Limerick product plants. Shares have been trading strongly around $50 this week on buy recommendations from Merrill Lynch and Paine Webber, with analysts believing the company will meet expectations for its first quarter.
