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Compaq hikes job cuts
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June 11, 1998: 7:22 p.m. ET
Company plans to cut 2,000 Compaq jobs bringing total layoffs to 17,000
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NEW YORK (CNNfn) - Hours after shareholders approved its merger with Digital Equipment Corp., Compaq Computer Corp. announced Thursday it was cutting an additional 2,000 jobs, up from the previous estimates of 15,000.
Compaq earlier announced it was cutting 15,000 Digital jobs. The latest round of cuts will come entirely from Compaq, the company said.
The cuts represent more than a quarter of Digital's 55,000 workers, but a much smaller portion of Compaq's 32,000 employees.
Compaq aims to break even in 2Q
Compaq also said it expects to break even in the second quarter after taking a restructuring charge.
The charges will include write-offs to close overlapping manufacturing plants and to fund compensation packages for employees losing their jobs.
Earl Mason, Compaq's senior vice president and chief financial officer, said the combined company should be back in the black by the end of 1998.
"While the third quarter will be transitional, focused both on the integration of Digital businesses and the achievement of synergies, we continue to believe earnings of the combined companies will be accretive as early as the fourth quarter," he said.
Houston-based Compaq announced it was buying Maynard, Mass.-based Digital in late January for cash and stock valued at $9.6 billion.
Compaq is the world's largest supplier of personal computers while Digital supplies networked computer systems, software and services to predominately business customers.
DEC's Palmer to leave
On Wednesday, Digital Chairman and Chief Executive Officer Robert Palmer announced he is leaving the company. Under a severance agreement reached with Digital in mid-March, the 57-year-old executive will take home at least $6.45 million in cash.
He has led Digital as president and chief executive for the past six years and was elected chairman in May 1995, weeks before negotiations to merge the two companies began.
Compaq also announced that Eckhard Pfeiffer will remain at the helm of Compaq, continuing in his role as chairman and chief executive officer.
Compaq (CPQ) shares ended off 5/8 at 28-1/16 while Digital (DEC) shares closed down 5/16 at 56-11/16.
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