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Friday, June 12, 1998 Published at 15:26 GMT 16:26 UK

Business: The Company File

Compaq sacks 6% to absorb Digital

Going, going, gone..

Compaq, the US computer manufacturer, is to lay off 2,000 workers, or 6% of its workforce, as part of its plans to merge with Digital Equipment Corporation.

Compaq bought Digital for $9bn (6bn) in the largest transaction ever in the computer industry, making the company the second largest PC maker after IBM. Last year, the company acquired Tandem Computers for $3bn.

Digital is already facing the loss of one-quarter of its workforce - some 15,000 jobs - as part of the restructuring process.

The shake-out is part of the process of slimming down the personal computer sector which is facing increased competition as customers are moving to buy cheaper computers costing less than $1000 (600).

Digital, once a major force in computers, lost its independence after failing to spot the PC revolution, and losing billions.

Compaq is hoping that the acquisition will help it expand into the office and high-end side of computers. The combined company is expected to have revenues of $33bn this year, up 34% from 1997.

Only one member of Digital's management team, John Rando, head of the service division, is staying on in the new company. Compaq hopes to capitalise on the lucractive business of helping companies set up and service their computer networks.

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