Tech companies look to vacations to cut costs

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

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

Likewise, HP said that it would be closing all of its U.S. offices in the week surrounding the Independence Day holiday.

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

Curbing costs through mandatory employee vacations 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 Computer Corp. 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 vacation 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 earlier this week that it plans to return to profitability in its fourth quarter, ending June 30, the company reported 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 percent of its workforce, or 350 employees.

HP is at and Sun is at