Hp Drops Disk-Drive Production Move Eliminates 1,700 Jobs, Including 1,150 In Boise

Thu., July 11, 1996

Associated Press

Hewlett-Packard Co. said Wednesday that it is leaving the unprofitable disk-drive business, a move that will mean nearly 1,700 layoffs and a $150 million charge against the company’s earnings this quarter.

HP said it will close its Disk Memory Division, which had operating losses of about $100 million in the first half of the current fiscal year. It will now concentrate on the extended storage market, which includes tape drives and CD technology.

About 1,150 jobs in Boise and 530 in Penang, Malaysia, will be cut as a result of the restructuring.

The company, a leading maker of computers, printers and test-and-measurement equipment, also said that order growth across its broad product line has fallen during the first two months of the quarter, which ends July 31.

HP warned order growth is “likely to be significantly below” the 24 percent gain it enjoyed in the previous quarter.

HP chairman and chief executive officer Lewis Platt attributed the drop in order growth to customers and business allies who are trying to get rid of inventories and curb capital spending.

“We’ll know the exact impact of these changes on our full-quarter’s results in about a month, but it’s clear that this slowdown in order growth, as well as intensifying price competition, will hurt our revenue growth and profitability,” Platt said.

It remained to be seen, he added, if the slowdown in order growth indicated a temporary change in demand or a fundamental shift.

Hewlett-Packard reported the news after markets closed. Its stock closed at $89 a share, up $1.875, on the New York Stock Exchange.

The $150 million third-quarter charge will cover asset adjustments and severance but won’t include any further operating losses at the division. HP expects the division’s losses to be about the same in the second half of the fiscal year as the first.

Employees at the disk-drive division will get priority for job openings in other HP operations in Boise and Penang, the company said.

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Hp Drops Disk-Drive Production Move Eliminates 1,700 Jobs, Including 1,150 In Boise

Jesse Tinsley

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Molly Quinn

Rob Curley

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