Compaq issues warning, will cut 5000 jobs

Compaq issues warning, will cut 5000 jobs

Compaq issued an earnings warning after the close of the New York financial markets yesterday - the second in as many quarters - projecting no growth for this fiscal quarter over the same period last year, and lowered revenue. Compaq also said it would cut 5000 jobs in a consolidation of its consumer and commercial product groups.

Additionally, Compaq named a new chief financial officer, Jeff Clarke, former vice president of finance and strategy for sales and services.

Compaq lowered its earnings outlook for its first fiscal quarter 2001, ending March 31, to a range of $US0.12 to $0.14 per share, about even with the first fiscal quarter of 2000. Revenue is estimated to be between $9.0 and $9.2 billion, about 4 per cent below the same quarter last year.

The prior consensus financial estimates of analysts for Compaq pegged the first quarter at $0.18 per share on revenue of $9.6 billion.

The company said it plans to eliminate about 5000 positions, or 7 per cent of its workforce worldwide, primarily from the new Access unit formed by the consolidation of its consumer and commercial product groups, as well as jobs from the supply chain and marketing organisation.

Compaq said it will take a restructuring charge of $125 million to $150 million in the first quarter resulting from the consolidation, while recognising about $120 million from a one-time gain primarily from the sale of the company's investment in the Road Runner joint venture.

The impact the announcements would have in Australia was not known at the time of press.

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