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October 4, 1998

HP OFFERS SEVERANCE DEAL TO 2,500 EMPLOYEES

By CBR Staff Writer

Hewlett-Packard Co said Friday that up to 2,500 employees will be asked to accept voluntary-severance deals as part of the Palo Alto-based giant’s attempts to trim expenses in the face of faltering revenues. The costs associated with the move will run to around $75m, forming half of the previously announced $150m charge set to fall in the fourth quarter. 800 staff are expected to leave from the company’s silicon valley operations with the remainder leaving from divisions worldwide. The company currently employs 127,200 staff. HP emphasized that severance terms would be generous and US-based employees accepting the offer will leave with between six and twelve months salary, dependent upon length of service. A spokesperson for the company was insistent that the cuts would be voluntary and that the phrase ‘lay offs’ was not relevant. HP said its ‘voluntary severance incentive’ would affect jobs in manufacturing, marketing, administration and research. In its third quarter through July this year, HP reported sales of $10.9bn, a sequential decline of 9% which the company blamed on weak Asian demand and pricing pressures in the PC market. This latest move is a direct result of HP’s falling sales and other measures have been taken to save costs including a squeeze on travel expenditure and tighter controls on the hiring of new staff. HP also said it would be closing most of its facilities for a week over the Christmas period.

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