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Compaq to cut jobs
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July 10, 2001: 4:57 p.m. ET
Computer maker to cut 1,500 more jobs for a total of 8,500, take $490M charge
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NEW YORK (CNNfn) - Compaq Computer announced Tuesday that it plans to cut an additional 1,500 jobs this year, but is on track to meet second-quarter earnings expectations despite lower than anticipated sales.
Houston-based Compaq (CPQ: down $0.44 to $13.76, Research, Estimates) expects to report second-quarter earnings, on an operational basis, of 4 cents a diluted share. Earnings tracker First Call expects the computer maker to report 4 cents a share.
However, revenue will fall 9 percent to about $8.4 billion primarily due to the worsening economy in Europe, the company said. Analysts polled by First Call had forecast Compaq to log revenue of $8.81 billion.
"It is now clear that the economic slowdown is spreading overseas, and we will therefore move more swiftly and go even deeper in our structural cost reduction programs," Compaq CEO and Chairman Michael Capellas said.
In April, Compaq announced plans to cut 7,000 positions, but the company boosted that amount to 8,500 Tuesday. Of the original 7,000 amount, 4,500 were expected to come through severance and 2,500 through attrition. Compaq now plans to offer severance to all the 8,500 people that will be laid off, spokesman Arch Currid said.
Of the 8,500, the computer maker has already cut 3,500. Compaq plans to take a $490 million charge related to the reduction of about 4,000 positions but expects the cuts to save about $900 million.
Compaq plans to announce second quarter results on July 25.
In after-hours trading on Instinet, Compaq shares gained 34 cents to $14.10. 
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