Hewlett-Packard on Tuesday announced plans to cut 14 500 jobs over the next 18 months, representing 10% of the struggling company’s worldwide workforce.
The plans were the first significant move by Mark Hurd, who was hired after Carly Fiorina was ousted as chief executive in February following a turbulent six years in office. He had flagged a likely restructuring of the personal computer and printer maker in May, shortly after he joined the company.
”I think this will make us simpler, nimbler and quicker,” Hurd said. ”We will always be working to grow our company and to get more efficient. The two go hand in hand.”
The company said ”more than half” of the jobs would be cut in support functions such as information technology, human resources and finance. But the firm declined to say where exactly the axe would fall. Details, Hurd said, would be released as they become available.
HP employs 42 000 people in Europe, the Middle East and Africa but does not break the figure down to country level. It has offices in Britain in London, Birmingham, Reading, Bristol, Bracknell, Warrington and Erskine.
HP aims to save an annual $1,9-billion through the overhaul. The company said half that amount would fall through to operating profit while the remainder would be reinvested in the business. The company said the impact on the sales force and research and development would be minimal.
The company is also cutting back retirement benefits for its American employees, realising savings of about $300-million a year.
Hurd said the board had been working on the changes before his arrival. There are no plans to reshape the business further, he added — perennial speculation suggests that the personal computer division could be spun off. ”We’ve been focused on optimising the current HP to make it the best HP we can.”
Hurd’s comment echoed that of the board at the time of Fiorina’s exit. The company said then that the problem had been execution and not strategy.
Fiorina had arguably been the most powerful woman in corporate America before she was forced from the company.
She engineered the $19-billion takeover of Compaq in 2002, railroading descendants of HP’s founders who vehemently opposed the deal. Shortly after the merger she cut 15 000 jobs from the combined operation but failed to deliver on profitability.
HP has been struggling to compete with IBM in high-end services such as servers and consulting for corporate clients and with Dell Computer at the opposite end of the spectrum, in the largely commoditised market for personal computers. Dell began selling printers in 2003, eating further into HP’s core business. To regain market share, HP has been forced to lower prices on printers this year by 33%.
Hurd (48) joined the company in March from the technology firm NCR.
The cuts were not as big as some Wall Street analysts had been anticipating. Some had forecast up to 25 000 job losses and the lower number caused some selling. HP shares were down 7 cents at $24,85 in early trading.
HP is taking a $1,1-billion charge over the next six quarters to pay for the restructuring.
Outside the United States, HP said it would offer terms in accordance with local laws and regulations.
Hurd had already made some changes, including the separation of the personal computing and printing business in June, five months after Fiorina had combined them.
The HP announcement comes a day after IBM increased its planned job cuts from 13 000 to 14 500, most of which will be in Europe. – Guardian Unlimited Â