UPDATE 1-HP to extend holiday shutdown to cut costs

Mon Nov 17, 2008 8:26pm EST

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(Updates with company comment)

SAN FRANCISCO Nov 17 (Reuters) - Hewlett-Packard Co (HPQ.N) has notified employees that it will extend its planned one-week holiday shutdown by an additional week as a cost-cutting measure, it said on Monday.

The majority of employees will be paid during their time off, the company said.

"Shutting down during a period when many employees traditionally take vacation helps HP achieve operational savings and allows employees to enjoy more time with their families," a spokeswoman said.

The global financial crisis and slowing economy have roiled the prospects for PC makers, which are scrambling to rein in costs. Many analysts now predict that PC shipments will fall in 2009.

Some analysts have said HP was better insulated than some of its competitors from the impact of the economic downturn, because of its recurring revenue streams from services and software and limited exposure to the PC market.

The company said in September it would lay off 24,600 employees following its acquisition of Electronic Data Systems.

Earlier this month HP rival Dell Inc DELL.O asked employees to consider taking up to five days of unpaid vacation as it works to cut costs.

Silicon Valley was hit with a slew of layoff announcements last week from big names such as Sun Microsystems JAVA.O and Applied Materials Inc (AMAT.O).

Shares of Palo Alto, California-based HP closed down $1.12, or 3.7 percent, at $29.34 on the New York Stock Exchange. (Reporting by David Lawsky and Gabriel Madway, editing by Richard Chang)

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