The future of some 2,200 jobs at Compaq Computer Ireland is in question, following a decision by the US parent to make 6,000 to 8,000 redundant worldwide, out of its 69,000 workforce, in a cost-cutting exercise. Some 800 to 1,000 of the redundancies will be in Europe, the Middle East and Africa.
A breakdown of the redundancies in specific areas will not be given until August 23rd, said Mr Michael Capellas, the group's president and chief executive officer. Compaq is "not going into details" until then.
Asked if the decision to move out of the Internet (it decided to sell an 83 per cent stake in its Internet operations, including the AltaVista search engine, to CMGI) meant that the proposed expansion of the Dublin operations will not happen, he said Compaq is "not getting out of the Internet".
The deal with CMGI also involves a plan to build up a 16.4 per cent stake in CMGI and Mr Capellas said he believed the company has "strengthened our position" and stressed there would be "great synergies" between the two companies.
Compaq has operations in Dublin, Galway (Digital) and Belfast. They include sales, marketing and service centres, the European customer support centre, and a European software distribution centre.
Earlier this year, during a previous redundancy programme, Compaq said no employees located in either Dublin or Galway would be affected. It said also it was planning to expand the Dublin-based call centre as part of its strategy to become an Internet leader.
The latest redundancy programme follows yesterday's announcement of $270 million (€264 million) pretax losses in the second quarter to June 30th, 1999. This has been attributed to price pressure on PCs, inadequate revenue growth and a non-competitive cost structure.
The redundancies and closures are expected to lead to charges of $700 million to $900 million which will hit the third-quarter results.
"We are aggressively taking the appropriate actions to restore the company's growth and financial performance," said Mr Capellas. "The realignment of the company is fully under way, our management team is basically in place and we already offer the powerful solutions and range of products customers need to maximise Internet benefits through Compaq's NonStop eBusiness capabilities".
Compaq's revenue in the second quarter rose from $5.37 billion to $7.78 billion. Mr Capellas told participants at a teleconference that the group's share of the PC market rose from 14.4 per cent to 16.6 per cent in the US and was stable at 17.2 per cent in Europe "but double our nearest competitor".
Capellas faces more than a few hurdles as he gets to grips with Compaq role: page 7
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