Silicon Valley faced its slowest week since the US economic downturn began, as major technology firms sent staff home for an extended July 4 holiday to turn off the lights and save money.

With so many companies asking - or telling - workers to take the entire week off, local restaurants were quiet, the familiar freeway traffic jams were gone and the pace of work among those left was slowing visibly by Tuesday.

Network computer maker Sun Microsystems sent most employees home for four work days this week, which includes the July 4 holiday.

Computer storage maker Network Appliance, Web software publishing firm Adobe Systems and chipmaker Xilinx also sent staff on holidays.

"This is one of the nicest weeks to commute to the Valley, beautiful weather, extra seats on the train and less cars on the street," said Jim Shissler, public relations manager at AltaVista.

Others left behind as business wound down in Silicon Valley were less enthusiastic.

"Going to work feels a little bit like being in a minimum security prison," said an employee of a tech hardware company. "I have to be there, but there's not much to do."

To avoid layoffs, some Silicon Valley companies have taken unusual cost savings measures such as mandatory Fridays off without pay this year. This week a number shut down altogether, saving salaries and the other costs of keeping the cafeteria open and the lights on.

Analysts and executives said the cost-saving steps should leave technology companies with some room to manoeuvre when the economy hits bottom or begins to improve.

"You don't leave yourself without flexibility," said a spokesman for Dell Computer, which told many middle-and upper-managers to take off five, unpaid days this quarter.

"Cost cutting is at the top of the agenda. On the other hand, there are some companies that simply don't want to be scaling back so much that they won't be prepared for when the recovery does happen, so it definitely is a balancing act," said Daniel Kunstler, a J.P. Morgan analyst.

The subdued climate in Silicon Valley marks a turnaround from a year ago, when some eager dot-com employees routinely worked 90-hour weeks and many worked right through holidays.

Intel warms down
Last week leading personal computer microchip maker Intel slowed operations, in what the company called a "warm down" that will run until next week.

The three top personal computer makers have all told employees to take time off, although terms vary. Compaq Computer asked workers to use accrued vacation.

Number one PC maker Dell has told employees to take five unpaid holidays of their choice this quarter, and Number three Hewlett-Packard has asked employees to voluntarily take off eight days of their choice, or a 10 percent pay cut, on top of six days the company earlier asked employees to take in the next four months.

Technology companies and investors have been looking for confirmation that demand and corporate investment will stabilise or improve in the second half of the year. Many executives have pushed back hopes for recovery to 2002 and see, at best, a stable six months ahead.

Stability at least would let companies more accurately plan for profitability and avoid more painful cost-cutting.

Two days after the HP program was announced, 33,000 of approximately 90,000 employees had responded to requests in the global cost-cutting program, and 96 percent had agreed to participate, spokeswoman Rebeca Robboy said.

But the threat of more job cuts, on top of about five percent cuts made this year, has not gone away.

"Among the long-term actions we are looking at are severance programs that address performance issues" and skill balancing, Robboy said.

Additional reporting by Andrea Orr.

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