Peter Henderson and Nicole Volpe
SAN FRANCISCO: Struggling to meet financial targets, computer maker
Hewlett-Packard Co. is turning to traditions born of the Depression, saying on
Friday it had asked for volunteers to take pay cuts or time off.
Hewlett-Packard's famous "HP way", the community spirit developed
by its founders, is something of a legend in Silicon Valley, spreading out
around HP headquarters in Palo Alto, California. But the cozy workplace
informality has become tinged with senses of entitlement and bureaucracy that
slow HP down in the entrepreneurial rat race of Silicon Valley, some analysts
say.
They fear chief executive Carly Fiorina is walking a thin line between
destroying company culture and "reinventing" the firm as a better
business machine. She and her management has already signed up for the plan,
Hewlett spokesman Dave Berman said.
"It's a 10 per cent pay cut, or eight paid vacation days," he said.
"We've had a tradition of employees pitching in and doing what they can in
difficult economic times." The vacation would come from days already
accrued, but employees could also take a mix of salary cut and days off. Or they
could ignore the program altogether.
"There is an option to do none of the above, and your manager will never
know, because we are not tracking it to that level," Berman said. Accrued
vacation is a financial liability, and so by taking days owed employees improve
the financial health of the firm. "These are aimed at making our
third-quarter consensus estimates, although obviously these efforts are going to
go through the fourth quarter as well," Berman said.
Network computer maker Sun Microsystems Inc. and Compaq Computer Corp. are
shutting down next week, and computer storage maker Network Appliance Inc. and
Dell Computer Corp. are requiring employees to take some time off this quarter.
All those programs are designed to cut costs in hard times, but only
Hewlett-Packard's is voluntary.
HP asked employees to take some time off around Christmas last year and in
May asked them to take 6 days vacation by October, the end of the fiscal year,
again voluntarily. Berman declined to say how effective the program was so far,
noting the most recent request was made only a month ago.
Hewlett-Packard has repeatedly lowered financial targets since the economic
downtrend began late last year, and Fiorina said on June 6 that she was more
cautious about third-quarter guidance and would cut costs to try to meet Wall
Street's profit goal, which HP said at the time was 23 cents per share.
Employees would take the pay cut until the end of the fiscal year on October
31, or take the 8 days - perhaps in addition to the previously requested 6 days
- by then. Other cost-cutting measures include tighter cell phone expense limits
and travel policies, Berman said.
(C) Reuters Limited 2001.