As many as 15,000 jobs will be lost at Digital Equipment Corp it emerged on Wednesday, as DEC’s board of directors unanimously approved the company’s acquisition by Compaq Computer Corp. DEC’s shareholders have been invited to vote on the deal at a meeting scheduled for June 11, and if approved, the company estimates that merger costs will reach as high as $1.5bn to $2bn, including the costs of lay offs. DEC would not directly confirm the number of job cuts to be made from its 54,000 workforce, but the figure is understood to be in the region of 15,000. Meanwhile, professional fees lavished on the many lawyers and accountants putting the deal in place have been estimated by the company to be $85m. Additionally, Bob Palmer (DEC’s chief executive) is set to rake in a $6.45m golden handshake should his contract be inadvertently terminated. The terms of the $9.6bn deal remain unchanged, with Digital’s shareholders set to receive $30 in cash and 0.945 shares of Compaq for each share held, giving DEC’s stock holders a 9% stake in the combined company. But if for any reason, DEC’s shareholders fail to approve the deal, the company becomes liable for a $240m penalty payment to Compaq. In a separate announcement, DEC revealed that after disagreements with the Securities and Exchange Commission over accounting treatments, it would now be restating its third quarter results. A net gain of $35m will be added, bringing the total earnings for the quarter to $35m or $2.23 per share. The difference stems from the treatment of finished goods inventory in DEC’s sale of its networks products business to Cabletron Systems Inc back in November last year. Its seems DEC was keen to delay recognizing the gain on the sale of this inventory until later periods. The SEC disagreed.
