J.P., Here's the HWP announcement from ZDNet. What is also interesting is there licensing of the CMS tape drives to Cheyenne.
Hewlett Packard Co. will take a $150 million pretax charge against third-quarter earnings associated with the elimination of its disk drive manufacturing division.
The division, which operates plants in Boise, Idaho, and in Penang, Malaysia, and employs about 1,680 people, has grown slowly this quarter and had an operating loss of $100 million in the first half of fiscal 1996 ended Oct. 31, according to Roger Archibald, group marketing manager for the information storage group. He said HP expects a comparable loss during the second half of its fiscal year.
The $150 million charge consists of inventory write-downs and severance pay, and does not include the operating losses.
The workers will be given "priority consideration" for job openings at those sites, which house other divisions, and will be offered a voluntary severance package, Archibald said. Due to the division's problems, HP's corporate order growth will be "significantly below" the 24 percent increase in growth last quarter.
In a statement, HP chairman Lewis Platt said order growth is down in the company's computer and measurement businesses, as well as in the American and Asian markets.
"We're seeing the effects of customers and channel partners who are adjusting their inventories and capital spending," he said.
Platt said the company has already cut discretionary spending and is evaluating future spending plans.
HP will continue to operate in the storage market, focusing on tape drives, libraries and CD-recordables, company officials said in a release.
Today, HP licensed its Colorado Backup tape drive products to Cheyenne Software Inc. Cheyenne will pay a one-time licensing fee to HP and will pay royalties for each tape drive sold.
The elimination of the DMD has been under consideration for at least six months, Archibald said. "It was a combination of both continually evaluating our investment trade-offs and shifting investments from online to extended storage," he said.
The company experienced problems in getting its new 8.7M-byte storage device ready for volume production, although samples shipped to customers three months ago when HP began eliminating its 2G-byte product.
"The order growth was a natural decline as we've obsoleted our 2G-byte," Archibald said. "There were a couple of technical challenges that prevented us from ramping [the 8.7G-byte] product."
He said the 8.7G-byte drive could be produced in volume next quarter if HP can find a company willing to license the technology, but HP will not enter into production. |
