Struggling HP, Xerox lay off thousands

Hewlett-Packard announced it is laying of 2,000 of its workers as part of a
restructuring program. Xerox, upon announcing a $200 million fourth quarter
loss, said it is cutting 4,000 jobs to cope with its slumping business.

HP spokeswoman Rebecca Robboy said the layoffs at her company represented
about 2 per cent of its workforce. She said the cuts are the outcome of an
overall restructuring program that has been going on for about a year, including
the consolidation of product lines. "This has been in the works for a long
time."

Laid-off workers will be given the opportunity to apply for other currently
vacant positions in the company. But only a few hundred such positions are
available.

On Wall Street, the HP action was quickly seen as the latest in a series of
signs the Palo Alto computer and peripherals maker may have been hit harder than
expected by the recent slowdown in high-tech business. As could be expected,
investors, already nervous about HP’s ability to meet lofty sales and profit
targets, reacted positively to the lay-off, with HP shares rising $3 to $37.

Xerox said it is cutting 4,000 jobs to better deal with increased
competition, a poorly executed sales force reorganization, sluggish sales and a
sharp drop in its stock price.

The company said it is continuing to make deep cost cuts as part of a
turnaround plan announced last October. Xerox spokesman Bill McKee said the
company has not decided yet where all the jobs will be cut. "Every area
except sales is on the table. This is worldwide, and there is some indication
that these numbers will skew toward Europe and developing markets."

The layoffs, plant closures and other cost-cutting measures are expected to
save $1 billion in operating expenses by the end of the year, said company
president Anne Mulcahy.

Mulcahy said revenues in the fourth quarter were hurt by news coverage of the
company's problems. She also said the company has no plans to file for
bankruptcy protection because the turnaround plan is on track.

To raise cash, Xerox is selling half of its 50 per cent stake in Fuji Xerox
to Fuji Photo Film. The company is also trying to sell Xerox Engineering
Systems, which provides technical support for wide-format printing and document
management.

Xerox lost $194 million in its most recent quarter compared with profits of
$294 million in the year-ago period. Sales were $4.8 billion, down from $5.5
billion in the same quarter of 1999.

Xerox Chairman Paul Allaire said he expects a similar loss in the first
quarter, then sequential progress throughout the year. "We expect an
earnings recovery in 2001. We expect to achieve this even if the economy and the
competitive environment preclude any revenue growth in the year,'' he said.

For all of 2000, Xerox lost $384 million on revenues of $18.63 billion. Xerox
earned $1.42 billion on 1999 revenues of $19.55 billion.