Compaq is to cut 8,000 jobs in an effort to return to profitability, amid predictions of hard times ahead for IT vendors in the face of a corporate year 2000 lockdown on spending.
The redundancies, which will hit 10% of Compaq's workforce, follow the company's announcement of a $184 million (£116 million) second quarter loss on revenues of $9.4 billion (£5.9 billion).
Growth in Europe was described as "disappointing" by new Compaq CEO Michael Capellas. Between 800 and 1,000 jobs are expected to go in Europe.
Compaq would not say how many jobs would be lost in the UK, but most are likely to be in the newly combined services and enterprise computing divisions, which constitutes 80% of staff but 60% of Compaq revenues.
The UK head of Enterprise computing and services will be announced this week. A straw poll of Compaq management last week showed James Stevenson, director of Compaq's enterprise business unit, as favourite for the position.
The year 2000 lockdown which many large companies are initiating now will see IT spending frozen until after the danger period is over.
Despite corporate trepidation, Stevenson expressed optimism that sales of servers based on Intel's eight-way Profusion architecture would to be on target.
Similarly, Stevenson did not expect a negative effect on the launch of Compaq's high-end Alpha server, Wildfire, in the fourth quarter. Companies would continue to buy systems for evaluation and testing, particularly for e-commerce projects, but would not deploy them until they were through the danger zone, he said.
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