Compaq to axe another 1,500 jobs

Compaq is the latest company to add to the deepening gloom in the high-tech world, announcing that its sales forecasts for Q2 had been overly optimistic - and that a further 1,500 jobs are to go.

The PC giant had already said that 7,000 people were to leave the company, but now that figure has been raised to 8,500.

Revenue for its second quarter will be about $8.4bn, down nine per cent from the first quarter and about $600m lower than originally anticipated.

Compaq blamed the downward revision on weaker sales in Europe, and refused to say when the industry might see a recovery.

Shares were halted before the announcement was made, but went up slightly in after-hours trading to $14.18.

David Bailey, an analyst with Gerard Klauer Mattison & Co, told Reuters: "I don't think there is a lot positive to take away from this announcement. It indicates that Compaq's revenues continue to deteriorate, that they are undertaking yet another restructuring, which, while reducing expenses, could hamper some of their initiatives to refocus the company."

Michael Capellas, chairman and chief executive, said in a statement: "We are committed to taking aggressive actions during this period of slow demand to make permanent improvements in our business model."

Compaq has cut 3,500 jobs so far this year.