HP slashes salaries to cope with downturn
A day after reporting a 13 per cent drop in profits, computer and printing giant HP announced a company-wide pay cut which it said was the best alternative to widespread job cuts, dpa reported.
The world's largest personal-computer maker said it will reduce the salary of CEO Mark Hurd's by 20 per cent, executives' pay by 10 per cent to 15 per cent, and most employees' salaries by 5 percent.
"In an environment like this, there's no margin for error and no tolerance for inaction," Hurd wrote in a memo to employees. "My goal is to keep the muscle of this organization intact, but we do have to do something because the numbers just don't add up."
The move came six months after the company announced 24,700 job cuts, but Hurd said that investors were clamouring for more cost savings and job cuts.
"I'll be asked by investors, 'Where's the job action, where are you taking out this roughly, 20,000 positions?' Well, I don't want to do that. When I look at HP, I don't see a structural problem of that magnitude. At a company-wide level, I don't believe a major workforce reduction is the best thing for HP at this time."
According to technology news site The Register, US employees will see their pay packets shrink straightaway, but HP will take things slower in Europe due to more restrictive labour laws.
The company will make further cost savings by putting a ceiling on some US employee benefits.
In its latest earnings report the Silicon Valley pioneer said it earned 1.9 billion dollars, or 75 cents a share, compared with a profit of 2.1 billion dollars, or 80 cents a share, during the same period a year ago. Revenue rose per cent to 28.8 billion dollars from 28.5 billion dollars in the prior-year's first quarter.