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Compaq Profits Plummet, Layoffs Planned

Compaq’s newly minted CEO Michael Capellas yesterday reported the company would undergo a large-scale reorganization that would include cutting 8,000 jobs and closing facilities.

These moves were the result of a $184 million loss on sales of $9.4 billion that Compaq expects to post for the second quarter ended June 30. During the same period last year Compaq profits were $32 million on $5.8 billion in sales. The company cited pricing pressure and a non-competitive cost structure for its problems. The layoffs and plant closings, which were not detailed, will result in a $700 million to $900 million charge being incurred in the third quarter.

“We are aggressively taking the appropriate actions to restore the company’s growth and financial performance,” Capellas said.

The past several months has seen the virtual turnover of Compaq’s leadership, including the ousting of Capellas’ predecessor Eckard Pfeiffer.

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