Compaq to axe 5,000 jobs
The world's largest personal computer company is cutting 5,000 jobs and warning that its earnings will fall far short of forecasts.
Compaq blames increased competition in a weakening US economy, predicting that sales will fall by 4% to $9.0-$9.2bn (£6.26-£6.4bn).
The announcement means Compaq has fallen victim to the downturn in the US economy that has hit its rivals - and to which it seemed immune.
Around 7% of its 67,000 worldwide staff will lose their jobs as the company merges its commercial and consumer PC operations into a single business group.
"We see continued weakness in the U.S. economy, and resultant pricing pressures," said Michael Capellas, chairman and chief executive officer.
The company is cutting its first-quarter earnings outlook to 12 cents to 14 cents per share, compared with 16 cents a year ago and analysts' forecasts of 18 cents.
The Houston-based company reckons the restructing will cost it around $125-$150m and will mainly affect distribution and marketing.
City experts expect that the news will badly hit technology stock both in London and on the New York Stock Exchange when it opens.
