HP claims it must slash wages to save jobs

 

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By Stuart Turton

Posted on 20 Feb 2009 at 11:12

HP has told employees that it's cutting wages by 5% in an effort to save jobs.

The company reported profits of $1.9 billion in its first quarter, down 9.5% from the $2.1bn last year.

Mark Hurd claimed the company had "executed well in a challenging market" but has now introduced wide-ranging pay cuts in order to avoid "a major workforce reduction".

"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," he wrote to employees.

"There are pockets where restructuring needs to happen, and areas where actions will be taken as part of our ongoing workforce optimisation process. But at a company-wide level, I don't believe a major workforce reduction is the best thing for HP at this time."

To that end, Hurd announced wages would be slashed by 5% across the board, beginning in the US.

In Europe, where employment laws are tighter, executive wages will be cut first. Hurd is knocking 20% of his yearly wage, while executive council members will their pay trimmed by 15%.

The company also trimmed its forecast for annual profits. It now predicts annual sales will be between $112 billion and $116 billion, down $14bn on its previous forecast.