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Compaq announces 5,000 job cuts By MARK BABINECK The Associated Press HOUSTON � Compaq Computer Corp. will cut 5,000 jobs � or about 7 percent of its work force � and warned Thursday that its first-quarter earnings will fall far short of earlier projections. "We see continued weakness in the U.S. economy, and resultant pricing pressures," said Michael Capellas, chairman and chief executive officer of the world�s largest personal computer company. Officials at Compaq, with 67,000 employees worldwide, said the cuts would come quickly, mostly from supply chain and marketing organization changes, and not from early retirement or natural attrition. The layoffs and changes were estimated to save from $500 to $600 million. Even so, the company reduced its first-quarter earnings outlook to an estimated 12 to 14 cents per share. Analysts surveyed by First Call/Thomson Financial had been expecting 18 cents per share for the three months ending March 31. In the year-ago quarter, Compaq earned 16 cents per share, not counting gains in its investment portfolio. The Houston-based company also said it would merge some operations and take a restructuring charge of $125 million to $150 million in the first quarter. Capellas blamed a sharp decline in North American sales � particularly among low-end items � saying that the company�s other businesses are faring well in the U.S. and elsewhere. In its largest organizational change, Compaq will merge commercial and consumer personal computer operations into a single business group. Daniel Niles, an analyst for Lehman Brothers, said the earnings news could have been worse considering the market climate. He added, however, that Compaq cannot rely on its overseas strength. "It�s not going to hold. They know that as well," Niles said, citing several other technology companies already bracing for a worldwide economic slowdown. Mail Tribune Home | Ottaway Newspapers, Inc. | Dow Jones & Co., Inc. | Privacy | Contact Us Copyright � 2001 Mail Tribune, Inc.