Compaq increases 2001 job cull to 8500

Compaq has announced plans to cut a further 1500 jobs worldwide, adding to its originally planned 7000 redundancies announced this year.

The latest cuts will affect primarily access segment, supply chain and administrative functions, and will be made both inside and outside the US, the company confirmed.

Compaq justified the move by saying it believed it would make a profit of four cents a share, excluding restructuring fees and investment gains, on revenues of $8.4bn for the second three months of the year. The company had revenues of $9.2bn in the first three months of the year.

Originally, Compaq had said it expected to make about $9bn in revenues, but has lowered this estimate after seeing a weakness in Europe, particularly in the UK, Germany and Switzerland. Analysts had expected revenues of $8.8bn for the period.

"We continue to see very aggressive pricing across all regions, with it being most apparent in North America but catching up in Europe," said senior vice president and chief financial officer Jeff Clarke.

The firm said it had already cut 3500 of the 8500 jobs it plans to axe this year. In all, Compaq estimates that the cuts will result in annual cost savings of $900m.

Previous cuts have come as the firm consolidated its commercial and consumer PC divisions. This year, the firm has lost its status as global PC market leader to Dell, but is still top in Europe.

Compaq has said that servers, storage and services will become the main focus of its operations in the future, and has begun a 180-day plan to change the company's outlook.