Tech companies look to holidays to cut costs

Faced with a still lagging economy, a handful of US tech companies have decided to reduce costs by implementing mandatory employee holidays, perhaps figuring that telling workers to lay back for a week is better than telling them they are laid off.

          Faced with a still lagging economy, a handful of US tech companies have decided to reduce costs by implementing mandatory employee holidays, perhaps figuring that telling workers to lay back for a week is better than telling them they are laid off.

          Sun Microsystems and Hewlett-Packard (HP) are planning to shut down their US offices for the July 4 holiday week. Sun is asking employees to take paid holiday time, or go without pay if they have no paid time left, a company spokeswoman says.

          Likewise, HP says it will be closing all of its US offices in the week surrounding the Independence Day holiday.

          Web security and address provider VeriSign is asking employees to take at least three paid holiday days this quarter, with eyes on the July 4 week, a spokesman says

          Curbing costs through mandatory employee holidays is not an entirely new idea for the big IT vendors, who were forced to take similar measures last year when the economic slowdown took full force.

          Sun, HP and Compaq all closed their doors for the week of July 4, 2001. According to Sun spokeswoman Diane Carlini, the company received positive responses from employees regarding the holiday shutdown, which allowed Sun to save costs on running its facilities, as well as on logged holiday hours.

          While the economy has managed a slight rebound so far this year, corporate spending has not resumed in a manner sufficient enough to pull the vendors out of their financial slumps.

          Although Sun said last week that it plans to return to profitability in its fourth quarter, ending June 30, the company reports that orders have so far been down compared to the third quarter.

          HP reported a profit for its second quarter of this year, but still has cost savings as a priority, especially given its recent merger with Compaq.

          VeriSign, for its part, reported lower-than-expected earnings for the first quarter of this year and said that it was laying off 10% of its workforce, or 350 employees.

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