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. Last Updated: 07/27/2016

Compaq To Slash 8,000 Jobs

HOUSTON -- Compaq Computer Corp. plans to slash up to 8,000 jobs, or 12 percent of its work force, as it struggles to cut costs amid a $184 million loss in the second quarter brought on by computer price wars and slowing sales.

The cuts unveiled Wednesday are the first major move by chief executive and president Michael Capellas, promoted to the post just last week to turn around the No. 1 PC maker's flagging business.

The work force reduction, ranging from 6,000 to 8,000 jobs, comes on top of 17,000 jobs that Compaq already is axing after it acquired Digital Equipment last year.

The company tied its loss to intense price competition with rival sellers of desktop computers to businesses, which eroded profit margins. At the same time, Compaq's operating expenses rose 16 percent to $2.2 billion from $1.9 billion in the first quarter. Compaq blamed the higher spending on higher advertising, costs associated with its AltaVista web site and discontinued business ventures.

Compaq chief executive Eckhard Pfeiffer was ousted in April after Compaq posted a first-quarter profit that came in at less than half of expectations, followed by the departure of several other top managers.

Compaq has said it will shave $2 billion in annual costs and reorganize its business groups to improve financial accountability.

Compaq expects its restructuring, including the job cuts and related facility closings, to cost from $700 million to $900 million over the next three months.