HP, Gateway to Put Workers on Leave
Hewlett-Packard Co. and Gateway Inc. said Friday that they had ordered noncritical workers to take off up to 20 days without pay over the holidays in an effort to reduce costs in an industry hit by sluggish sales and intense price competition.
The moves by the No. 2 and No. 3 sellers of personal computers in the U.S. are a sign that the industry is struggling to find ways to generate demand at a time when PCs have penetrated 55% to 60% of U.S. households.
Contract workers in HP’s information technology division will take off 20 business days between Dec. 9 and Jan. 10, said Arch Currid, a spokesman for the Palo Alto company.
“Our action is purely a cost-cutting measure,” Currid said. The workers who will be furloughed normally perform support rules, such as staffing operations that run manufacturing processes and data centers.
Currid would not say how many workers would be affected or how much money HP expected to save. HP ordered contract workers to take off 14 business days in July, saving the company about $15 million.
Most of HP’s regular employees also will take a week off during the holidays, though with pay.
“Customer and mission-critical operations,” including customer support, call centers and order fulfillment, will continue that week, Currid said.
Gateway, based in the San Diego suburb of Poway, will furlough administrative, product development and other workers for five days between Dec. 24 and Dec. 31. A similar order was issued last Christmas to trim expenses at the troubled computer manufacturer.
“It’s part of a focus to manage our costs as tightly as we can,” spokesman Brad Williams said.
The order affects “a relatively small percentage” of Gateway’s 11,000 employees, Williams said. He would not give a specific figure or the amount of money Gateway hoped to save.
Chief Executive Ted Waitt told a technology conference Tuesday that Gateway would need a couple of strong weeks leading up to Christmas to reach the low end of its guidance on quarterly earnings. The company said in October that it expected to lose 10 to 13 cents a share.
Investors rewarded both companies in New York Stock Exchange trading Friday. HP shares jumped 57 cents to $18.83, and Gateway shares rose 18 cents to $3.60.
