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Wednesday, March 29, 2000

Xerox planning
to cut 5,000 jobs,
analysts say

A spokesman for Hawaii's
division, however, says it's
unlikely isle workers
will be affected

From staff and wire reports


Xerox Corp. is expected to announce this week that it will cut up to 5,000 jobs and take a first-quarter charge of between $500 million and $900 million, analysts said.

The Stamford, Conn.-based business machines maker continues to struggle with stepped-up competition and a reorganization of its sales force.

At Xerox Hawaii, Director of Marketing Ian Yee said yesterday that employees were informed a month ago of impending changes but without indications of where or how they would come. Yee said he doubts layoffs will occur in Hawaii because the company has been prospering and hiring new employees recently.

"I'm pretty confident we wouldn't be in the position of hiring anybody if we were going to lay off anybody," Yee said. He noted Xerox Hawaii has added a dozen employees since January and plans to hire another three. "We're fortunate because we're growing," Yee said.

The latest hires do not include new employees who replaced the seven workers murdered by a gunman at the company's Nimitz Highway office on Nov. 2, Xerox said.

Xerox Hawaii now has about 160 employees in Hawaii and about 40 on Guam.

In January, Chief Executive Rick Thoman told analysts that the company would take a first-quarter restructuring charge in the "hundreds of millions of dollars," but less than the $1.1 billion charge it took in 1998, when it eliminated about 9,000 jobs. At the time, Thoman said the company would be pursuing cost-cutting moves, but he did not say how many jobs would be eliminated.

Jack L. Kelly, managing director at Goldman Sachs, said he expects that about half of the charge will be to cover the costs of cutbacks in manufacturing operations, including some possible plant closings. The remainder will be used to cover the costs of severance packages for anywhere from 3,000 to 5,000 employees who could lose their jobs, he said. A cut of 5,000 jobs would equal 5.3 percent of the firm's 94,600-employee work force.

"When they made the cutback in 1998, it was an offensive cutback because things were going well. I think this one is at least partly due to the disappointing results they had last year," Kelly said.

The company's profits fell 52 percent in the fourth quarter, to $294 million, or 41 cents per share, compared with $615 million, or 84 cents per share, a year earlier. Revenues in the quarter fell 6 percent to $5.44 billion from $5.79 billion a year ago

The company has said it expects to see another decline in earnings in the first quarter.

Xerox spokeswoman Christa Carone said the company will make an announcement on its restructuring charge within the first quarter, which ends Friday. She would not comment on either the amount of the charge or the number of job cuts.

The Associated Press and Star-Bulletin reporter
Peter Wagner contributed to this report.

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