Tech giant HP has announced that it will be cutting its employees' pay by an average of 15 percent across the board for one year in a bid to improve the firm's economic outlook.
The company reported a 13 percent year on year decrease in profits and saw sales miss Wall Street expectations by roughly $3 billion with the printer and ink segment seeing sales declining by nearly a fifth.
Revenue rose to $28.8 billion, up marginally from $28.47 billion. HP's share prices are currently down by nearly 6.5 percent, dragging other companies such as Dell.
All employees of HP, the world's largest technology company, received a memo on Thursday morning when they turned on their computers this morning; in it, HP's CEO, Mark Hurd, explained why he enacted a salary cut in the company.
He wrote that “In an environment like this, there’s no margin for error and no tolerance for inaction, at a company-wide level, I don't believe a major workforce reduction is the best thing for HP at this time".
This decision bucks the trend of other technology companies like Microsoft or Google which decided to choose the alternative cost cutting route by slashing the number of employees, which, in theory should act as a morale boost.
Hurd's own salary has been cut by 20 percent while other HP executives took a hit between 10 and 15 percent while the rest of the HP employees saw their salaries fall between 2.5 and 5 percent.
HP had already decreased the number of employees at the company by nearly 25,000 in September 2008 and has already said that it would not be firing any more staff for a foreseeable future.
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HP's feeling the pinch, literally, and its cash cow is the first affected. HP makes a significant profit out of original ink cartridges and the recession is prompting a number of customers to look out for cheaper alternatives while companies are reassessing their printing needs.