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.