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Dell to Cut Costs by $2 Billion

Dell Inc. was I the news for a couple of reasons on Thursday.  In addition to being named by Reuters as the new mystery bidder for Quest Software, the Round Rock, Texas PC maker also announced it was planning to cut more than $2 billion from its annual costs over the next three years.  Cuts will mostly occur in the firm's consumer sales and supply chain operations as the company seeks to expand its offerings to corporate customers as consumer interest in PCs has taken a hit over the last few years with the rising popularity of mobile devices like smartphones and tablet computers.

Shares of Dell, which have fallen 15 percent on the year, rose slightly in Thursday trading but had gained nearly 4 percent on Wednesday after it announced its first-ever shareholder dividend.  While still No. 2 globally in PC sales behind Hewlett-Packard, Dell and the industry as a whole have seen sales decline ever since Apple launched the first iPad, kicking the tablet age into high gear.  The number of Americans using mobile devices for the majority of their computing needs has risen steadily since, and PC makers have struggled to adjust.

Dell has responded by increasing its efforts in other businesses, acquiring eight companies over the past year to increase its presence in the software sector, and is now expecting that unit to enjoy a 10 percent revenue growth rate through 2016.  That projection may even climb higher, analysts say, if Dell is indeed the hidden bidder for Quest and adds that company's enterprise software to its catalog.  After Tuesday's closing bell, Dell announced it would begin paying a shareholder dividend, its first ever, of 32 cents a share beginning in the third quarter.

Dell did not offer specific details about specific cost-cutting moves involved in its new plan, other than to confirm that its PC unit would be hardest hit.  Shares of the stock rose about half-a-percent during Wednesday's session, as analysts and investors took a pause to absorb the trio of major news reports about the company in recent days.