Hewlett-Packard Co. will impose a three-month, 5% pay cut for about 2,400 mid- to upper-level managers in an effort to cut costs, a company spokeswoman said Thursday.
The company, which has had a string of disappointing earnings reports, said it will also close its U.S. offices for four days between Christmas and the new year. HP also will ask all its operations outside of the United States to shut down their offices for comparable four-day periods, as local holidays permit.
“The cut that would go into effect Aug. 1,” said spokeswoman Anne McGrath. HP has not mandated pay cuts since 1985, but the diversified technology company has been struggling to control expenses most of the year and earlier in the quarter asked various divisions to impose voluntary pay cuts.
Although the move was never formally announced, various divisions of HP, such as its Test and Measurement products division, have already asked some employees to take pay cuts.
“HP is making its planning and going forward conservative,” McGrath said. “The business conditions in Asia continue to be weak, and we can’t assume that there will be a rebound any time soon.”
McGrath declined to comment about which company divisions have been hit hardest by recent downturns in the technology sector, due to the quiet period before company earnings are announced on Aug. 17.
HP shares rose 75 cents to close at $57.25 on Thursday on the New York Stock Exchange. The news was announced after the market closed. The stock has plunged 30% from a 52-week high of $82.38 as HP’s earnings have continued to disappoint Wall Street.
Last week, the company warned its earnings would be below analyst forecasts and probably would not match the 58 cents per share earned in the year-ago third quarter.
“The goal is to try to preserve jobs, to keep the work force intact and strong when this turns around,” McGrath said, noting that no layoffs are planned.