Compaq Computer is among the tech giants adopting the cost-cutting measure, confirming Thursday that 30,000 of Compaq's 33,000 U.S. employees will be off next week as part of a mandatory shutdown of all nonessential operations, such as customer service. Compaq's 3,000 employees in California will have the option of working because of questions over whether state laws mean forced vacations could subject companies to paying workers overtime.
However, Compaq expects most of its workers in California to take time off as well.
The move is similar to plans announced at other tech companies, including Sun Microsystems and chipmaking equipment leader Applied Materials, which will also be largely closed next week.
A Hewlett-Packard spokesman said Friday the company has asked employees to take either 14 days of paid vacation between May 1 and Oct. 31, 10 vacation days and a 5 percent pay cut, or six vacation days and a 10 percent pay cut.
HP spokeswoman Suzette Stephens said in April that her company has been a pioneer of using vacations as a cost-cutting move, having used the strategy in the 1960s, 1970s and 1980s.
"It's a tactic that goes back to (co-founders) Bill (Hewlett) and Dave (Packard)," Stephens said at the time. "Everybody chips in and takes some measures, and that avoids more serious measures."
Having many employees off at the same time allows companies to save on facilities and other costs. Another financial benefit of such moves is that accrued vacation time is counted as a liability on the balance sheet. By having all workers use four vacation days at once, the liability is reduced. Plus, the summer is a typically slow time for the computer industry.
Workers at Compaq were notified of the planned shutdown in March, according to a company representative. The representative said the decision came at the same time Compaq changed its vacation policy to make all vacation days for the year available as of Jan. 1. As a result, the representative said, workers should have plenty of vacation time available.
Other companies that will be basically shuttered next week include programmable chip maker Xilinx and software giant Adobe Systems. Xiliinx workers can either take time off unpaid or use vacation time, while California workers also will be able to work from home. Vacation is suggested at Adobe, although the company expects to be largely shut down, according to a representative.