COMPUTER maker Compaq scraps attrition program, plans to eliminate 4,000 more jobs
Wednesday, July 11th 2001, 12:00 am
By: News On 6
HOUSTON (AP) _ When Compaq Computer Corp. announced earlier this year it was restructuring, the company hoped natural attrition would allow it to shave thousands of jobs.
But a sour economy, particularly in the tech sector, meant Compaq workers had no place to go. As a result, the Houston-based computer maker said Tuesday it plans to lay off 4,000 workers.
``Given the weak worldwide economy, our attrition has been lower than expected, so we have accelerated the process by including these positions in the latest charge,'' said Jeff Clarke, Compaq's chief financial officer.
The staffing cuts bring the total number of jobs Compaq plans to terminate this year to 8,500, or about 12 percent of its work force.
Compaq had said earlier this year it planned to eliminate 7,000 jobs, with 4,500 coming through layoffs and the rest through attrition. On Tuesday, it said all cuts will be through layoffs.
The announcement, made after trading closed on the New York Stock Exchange, came as the computer maker said second-quarter revenue would be down 17 percent from the year-ago period, to $8.4 billion.
The computer maker blamed worsening economic conditions and intensifying price wars in Europe.
Lehman Brothers analyst Daniel Niles called Compaq's news, following warnings from chip maker Advanced Micro Devices Inc. and storage giant EMC, is troubling.
``You hear from EMC, AMD and now Compaq, and it starts to call into question a second-half (economic) recovery,'' Niles said.
Compaq's announcement boded much worse for the overall economy, and tech companies in particular, than for the company itself, Niles said.
``In some senses Compaq's results aren't so bad, and the bottom line is coming in pretty much where it was guided to,'' Niles said.
Like the previous cuts, Clarke said the additional terminations are expected in Compaq's personal computer business, supply chain operations and administration.
Shares of Compaq fell 44 cents to $13.76 in trading Tuesday on the New York Stock Exchange, but rose to $14.20 in after-hours trading.