Compaq Computer last night announced plans to cut 5,000 jobs, 7 per cent of its global workforce, as it lowered its first quarter 2001 earnings outlook to 12-14 US cents a share.

Wall Street analysts had expected Compaq to earn 18 US cents a share in the first quarter.

The company employs about 2,200 people in Ireland at plants in Dublin, Cork and Belfast.

Explaining the lower earnings forecast, chairman Mr Michael Capellas said: "We see continued weakness in the US economy and resultant pricing pressures."

The company foresaw first quarter sales of $9- $9.2 billion, down 4 per cent from the same quarter of 2000.

Compaq said it planned to eliminate about 5,000 jobs as part of a package of measures expected to save between $500 million and $600 million a year. The company will also merge its commercial and personal computer operations and take steps to reduce the time it takes to fill orders.

The news dragged down the share prices of rivals Dell and Sun Microsystems.

Compaq will absorb a restructuring charge of up to $150 million in the first quarter to cover the changes.

"Clearly we are operating in a challenging environment," Mr Capellas said. "The result of the actions we are taking today, coupled with our strong array of new products and solutions, will enable significant improvements in our business model and position us well in the mid and long term."

Also last night, Oracle, the world's second-largest software maker which employs about 1,000 people in Dublin, posted third-quarter results in line with lowered forecasts. Profits rose 16 per cent to $583 million or 10 US cents a share, up from eight US cents a share a year earlier. Initially, the market expected 12 US cents per share.