HP slashes salary on weak forecast

20 February 2009

Global technology major, Hewlett-Packard Co is finally feeling the strain of the economic slowdown after outperforming the market in recent quarters. It has slashed its employees' salary after the company announced a 13 per cent slump in profits and warned about profit levels for the year ahead.

HP chief executive officer Mark Hurd's salary will be axed by 20 per cent, while other executives and employees will have to take 5-15 per cent cut in their base salary, the company said yesterday.

Earlier in September 2008, the personal computer giant had cut about 25,000 jobs as part of its cost-containment strategy to cope with the fast spreading economic crisis.

The company reported first-quarter sales below analysts' estimates and reduced its earnings forecast for the year on the face of fall in demand and price for PCs, printers and other equipment worldwide.

The company's profits plummeted 13 per cent year-on-year on a revenue $30 billion, below analysts' estimate.  It also reined in its forecast; the annual sales are estimated at $112.5 billion-$116 billion, down $14bn on its previous forecast.

The company also issued weak second-quarter guidance, predicting sales between $27.5 billion and $27.7 billion, well below analysts' estimate of $30.95 billion.