Compaq executives today confirmed that over 10 per cent of the 8000 job losses it announced yesterday following worse than expected second quarter losses would be from Europe.
The company announced a net loss of $184 million or 11 cents per share for the second quarter ending 30 June. Revenue climbed to $9.4 billion from $5.8 billion in the same period last year.
In addition, newly appointed chief executive Michael Capellas warned that Compaq is facing a charge of between $700 million and $900 million following the job cuts and the closure of several facilities which would negatively affect results for the third quarter 1999.
Compaq today confirmed that between 800 and 1000 of the job cuts would be from Europe, but it was unable to specify which countries or divisions would be hit hardest.
Kasper Rorsted, vice president of Compaq's PC products and ecommerce group commented: "It's too early to say which areas they will be from."
He said that Compaq might drop some product lines following the restructure. "Each of the chiefs of the three new business units formed following the restructuring plan will look at the product lines. As head of the PC group, I will examine which areas are profitable or not," he said.
Rorsted said that the biggest challenge Compaq faces in Europe is maintaining its market share and regaining its leadership in the portable market.
"We still hold a good market share in the region, around 17 per cent, but maintaining this will be difficult."
He added that the two main drivers to Compaq's return to profitability would be the move to a customer choice model of selling, where the customer decides whether to deal direct or through resellers, and ecommerce.
Rorsted said he expected the company to have a strong year 2000.
Full details of job loss locations and facilities closures are due to be announced on 23 August 1999.
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