Compaq posts losses, cuts up to 8000 jobs
- 29 July, 1999 21:49
Compaq has announced a second-quarter loss of $US184 million as a result of PC pricing pressures, inadequate revenue growth and an increase in expenses. In addition, the company announced that it will reduce its workforce by 6000 to 8000 employees.
Worldwide sales for the quarter, which ended June 30, were $US9.4 billion and total revenues for the quarter grew by 17 per cent, the company said in a statement. A year ago, the company reported earnings of $US32 million for the second quarter.
Michael Capellas, Compaq's newly-installed president and CEO, said the job cuts were necessary to get the company back on track financially.
"We are aggressively taking the appropriate actions to restore the company's growth and financial performance," Capellas said in the statement. "The realignment of the company is fully underway, our management team is basically in place and we already offer the powerful solutions and range of products customers needed to maximise Internet benefits through Compaq's NonStop eBusiness capabilities."
The realignment will help the company institute a strategy that includes timely product delivery and cost reduction, he said.
The chief factors driving the losses were inadequate revenue growth, a decline in gross margins, and increasing operating expenses, Capellas added.