Hewlett-Packard to Cut 6,000 Jobs

SAN JOSE, Calif. – High-tech giant Hewlett-Packard Co. lowered its sales forecasts yet again Thursday and said it is slashing 6,000 jobs, more than 6 percent of its work force, because consumers are spending even less on technology than expected.

Its stock price fell more than 5 percent.

The job cuts come on top of 4,700 already announced this year and also follow several warnings that results would be worse than previously thought.

HP's chairwoman, president and chief executive, Carly Fiorina, said she now expects revenues in the third quarter, which ends July 31, to decline 14 percent to 16 percent from the same time last year.

In May, she had said sales were probably going to be flat to down 5 percent in the quarter.

"Economies around the world continue to weaken and our consumer business is being hit particularly hard," Fiorina said on a conference call with financial analysts before the stock market opened. Sales to consumers are expected to fall 24 percent, she said.

"I do not expect a second-half recovery in 2001," she added. "I have not expected that for some time."

The Palo Alto-based computer and printer maker didn't address its third-quarter earnings estimates; analysts surveyed by Thomson Financial/First Call were expecting 19 cents per share.

The projected revenue decline, from the $11.8 billion in sales HP achieved in the year-ago period, would put third-quarter revenues in the range of $9.9 billion to $10.1 billion. Analysts had been expecting $11.1 billion.

In early trading on the New York Stock Exchange, Hewlett-Packard was down 5.6 percent, or $1.43 a share, to $24.25.

HP is just the latest computer maker to cut jobs in light of the slumping PC market. Compaq Computer Corp. is laying off 8,500 people, with Dell Computer Corp. is cutting 5,000 jobs.

HP's latest cuts are expected to save the company $500 million annually. Fiorina would not specify the restructuring charge the company would need to take as it pays severance.

Though HP has eliminated 4,700 positions recently, it also has been hiring in key areas, and the company's work force has actually grown from 90,000 at the beginning of the year to 93,000 now. The new cuts will bring the work force to about 86,000, or 4.4 percent below what it was at the beginning of the year, spokesman Dave Berman said.

More employees might also be lost as the company moves to contract out more of its non-manufacturing operations, such as some accounting tasks.

HP said it has also taken additional short-term actions to keep expenses down. One such action, a voluntary payroll saving program, is expected to save approximately $130 million for the rest of the year, the company said. More than 80,000 employees offered to take pay cuts or use additional vacation days in an effort to trim costs.