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Gateway, HP Sets Furloughs For the Holidays

Gateway, HP Sets Furloughs For the Holidays

BY MIKE ALLEN

Senior Staff Writer

Employees of Gateway Inc. and Hewlett-Packard Cos. were told to take more time off this holiday season as part of a continued strategy to save the companies money by cutting back on labor.

Poway-based Gateway and Palo Alto-based Hewlett-Packard have used mandatory furloughs in the past as a result of a worldwide downturn in the sale of PCs, printers and other tech equipment. The companies did not furlough workers with direct customer contact.

“This is the same thing we did last year,” said Ashley Wood, spokeswoman for Gateway. “It will allow employees to spend more time with their families and at the same time it’s a cost-cutting measure to help us deal with the current market conditions.”

Gateway said workers would be unable to use vacation time for the mandated furlough, but HP is letting its employees use vacation hours.

Gateway’s furlough affects 25 percent of its total staff of 10,000 employees, mostly those in functions not involving customer service such as product development and engineering. The company has about 400 employees at its Poway headquarters.

HP’s furlough affects some 1,900 employees at its Rancho Bernardo facility, where mostly research and design on ink jet printers takes place.

HP’s local employment hasn’t changed that much from a year ago, in spite of its merger with Houston-based Compaq in May, and several subsequent companywide cuts, said HP spokesman Mitch Mitchell.

An early retirement program conducted before the merger was final resulted in reductions of about 80 people and some department restructurings after the merger reduced the head count by a few people, Mitchell said.

HP has some 86,000 employees worldwide.

Judging from recent financial results, HP is in far better shape than Gateway. It had net earnings of $390 million on sales of $18 billion for its fourth quarter ended Oct. 31.

Gateway reported net losses of $519 million on sales of $1.1 billion for its third quarter ended Sept. 30. The company announced earlier this month it might miss its fourth quarter earnings estimates.

Bruce Ahern, a local technology consultant, said many high-tech firms and smaller businesses have been asking their employees to take some vacation time around the holidays.

“A lot of little companies will do this, but they just don’t call it a furlough,” Ahern said.

Tyler Orion, executive director for the San Diego Regional Technology Alliance, said she wasn’t aware of many high-tech firms furloughing employees, although it sounded like a good concept.

“It sounds like a great way to say to the world, ‘We’re doing what it takes to stay in business.'”

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