Cutting costs, Ford Motor confirmed yesterday that it has cancelled a program that offers its employees cheap PCs.

"In May we deferred the program... Then the economy went sour on us and this was one of the items that came under cost-cutting review," said Ford spokesman Peter Olsen.

About 160,000 employees in the US and the Philippines took advantage of Ford's Model E program, launched in early 2000, which gave them a HP PC and an internet connection for $5 per month, said Olsen. The programme was initially planned to be open to all of Ford's 345,000 employees.

When launched this plan was seen as cutting edge and a cracking way to get people connected and on the internet. A counter-argument was that it was getting people to work longer hours by stealth.

Ford said cancelling the program brings it cost savings, but declined to be specific. Typically an employer pays about 75 to 80 percent of the cost of a PC ordered by an employee, according to PeoplePC, the company that managed the program for the carmaker.

Ford's decision to withdraw the program is not a sign of the times, according to PeoplePC spokeswoman Alex Obolensky. "We have had the same number of inquiries," she said.

Vivendi is still negotiating the second phase of its employee PC deal, said Obolensky. With about 84,000 PCs delivered, the multimedia and utilities powerhouse is PeoplePC's largest European customer.