Compaq has announced it is to axe 5000 jobs and spend up to $150m (£105m) on restructuring the business as the slowing US economy continues to take its toll on the IT industry.
The cuts, which equal about seven per cent of the company's worldwide workforce, are the result of a $150m merger between Compaq's commercial and consumer PC operations into a single Access Business Group.
The company blamed a duplication of roles among its staff as the "home and office marketplaces converge".
Job losses will come primarily from the company's access, supply chain and marketing divisions and are expected to save the business between $500m and $600m annually, the company claimed.
Compaq is also hoping to raise about $120m from the sale of its investment in the high-speed online services programme, dubbed Road Runner, which it launched in conjunction with Microsoft and Intel this year.
Despite such cost-cutting measures, the company warned that first-quarter earnings would barely reach those of the same period last year.
The company predicted turnover will be down four per cent to between $9bn and $9.2bn.
Michael Capellas, chief executive of Compaq, blamed the US economy and subsequent pricing pressures.
"Clearly we are operating in a challenging environment. However, the result of the actions we are taking, coupled with an array of new products and solutions [CRN, 14 March], will hopefully enable us to make significant improvements in our business model and position us well in the mid- and long-term."
Andy Brown, senior analyst at IDC, said: "US-based firms are being hit hard right now, and this strategy is typical of Compaq which wants to concentrate more on the high-end server and wireless technology markets."
Are partners encouraged by the big changes coming to Cisco next year? Josh Budd, content editor of CRN sister publication Channelnomics Europe, finds out
Thomas Kurian will join the company next week and transition into the top role in January
What is a former smartphone maker doing buying a next-gen security start-up, and what will the deal mean for Cylance partners' margins and market opportunity?
Samanage will use recent $30m investment to grow global operations and its channel