HP furloughs 4000 contractors, mulls permanent cuts

SAN FRANCISCO: Hewlett-Packard Co. is sending home just over 4,000 US

contract workers from its technology operations for three weeks while it decides

how many of those to cut, a spokesman said on Thursday.

The furloughs are part of a strategy to cut costs throughout the company in

the wake of its $18.7 billion merger with Compaq Computer Corp., HP spokesman

Arch Currid said.

The contract worker cuts by the computer and printer maker will be on top of

previously announced cuts of 15,000 permanent jobs, or 10 per cent of its work

force. The disputed merger was justified on the basis of potential savings and

from the global scale the merged company would gain to offer a full range of

technology products and services to its biggest corporate customers.

"As part of the integration effort across the company, ... we will

discontinue services where there is overlap," Currid said. That included

contract workers, he confirmed. The furlough affects most of the US-based

contract technology workers who run HP's computer centers and systems, Currid

said.

Decisions on which contracts to renew would be made during the furlough,

which runs June 24 to July 12 and would save HP between $15 million and $20

million, he said. HP has not decided how many of the contracts to permanently

cut, but it made a preliminary analysis to decide which ones it could manage

without for three weeks, he added.

"We've made the determination of which of those services are critical,

and they will not be furloughed," he said.

(C) Reuters Limited.