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HP shuts down disk drive division

Hewlett-Packard is closing its disk drive division in a cost of $150 million.

In a move that will cost an estimated $150 million, Hewlett-Packard has decided to close its disk drive manufacturing division.

The decision will affect 1,150 employees in Boise, Idaho, and another 530 employees in Penang, Malaysia. In a written statement, HP attributed the decision to a slowdown in demand combined with intensifying price competition. The company also conceded that its share of the disk-drive market has been steadily declining.

Saying that it is facing a slowdown throughout its product line, HP projected that growth in demand would be significantly below the company's second-quarter increase of 24 percent.

Although results for the third fiscal quarter won't be disclosed until the week of August 12, Wall Street reacted positively to today's announcement. HP stock rose 1-7/8 to close at 89 after trading as low as 85 during the day.

HP says it is working on moving other operations to the two factories to reduce potential layoffs.

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