PC Makers to Furlough Workers As Two-Year Slump Lingers
By GARY MCWILLIAMS
Staff Reporter of THE WALL STREET JOURNAL
HOUSTON -- Personal computer makers battling a two-year sales slump will furlough employees in cost-cutting moves.
Gateway Inc. and Hewlett-Packard Co. are requiring employees not directly involved with customer activities take five or more days off later this month.
In addition, H-P is requiring contract employees who work on its internal computer operation take an additional 20 workdays off beginning Monday. The move expands to its world-wide operations a similar layoff of U.S. contract workers last summer.
For both, it is the second year in a row of having nonessential employees use vacation or unpaid time between Christmas and New Year's Day. Two exceptions are Dell Computer Corp., Round Rock, Texas, and International Business Machines Corp., Armonk, N.Y., which aren't requiring employees take time off at the holidays.
The cost-cutting comes amid signs of continued weak demand and pricing pressures in what is traditionally the personal computer industry's biggest selling period of the year. This week, market watcher International Data Corp. repeated its forecast of lackluster PC shipments through the middle of 2003.
"We continue to expect slow worldwide PC shipment growth for the next several quarters, before the market accelerates in the latter half of 2003," said IDC analyst Loren Loverde. H-P cut about $15 million from expenses last July when it furloughed U.S. contract employees, according to spokesman Arch Currid. He could not estimate the cost savings expected from this month's world-wide furlough.
Home-PC maker Gateway said earlier this week tepid desktop-PC sales in October and November would put its fourth quarter financial estimates at risk. The mandatory vacations are "a way for us to be tight on our costs," said Brad Williams, a spokesman for Poway, Calif.-based Gateway.
Gateway workers affected by the shutdown include administrative, engineering and executive staffs, he said. Employees in manufacturing, sales and customer support will continue to work between the holidays, he added.
On Wednesday, Gateway Chief Executive Ted Waitt said the company would need two weeks of strong sales this month to meet even the bottom of a fourth-quarter forecast of revenue between $1.19 billion and $1.38 billion and a loss of between 10 cents and 13 cents a share.
Dell spokesman Bob Kaufman said employees not involved in customer activities often take the week off but it isn't manditory. "Typically, we've done it the last couple of years. IBM, which is moving more of its revenue to computer-services and software, is another exception to company-mandated holidays. "We're busy, I guess," said spokeswoman Jan Butler.
Write to Gary McWilliams at gary.mcwilliams@wsj.com
CORRECTIONS & AMPLIFICATIONS: An earlier version of this article stated that Dell was requiring employees to take days off. Dell spokesman Bob Kaufman said employees not involved in customer activities often take the week off but it isn't manditory.
Updated December 6, 2002 5:14 p.m. EST |
