HP laying off 27,000 workers in restructuring

AP

(AP) SAN FRANCISCO - Hewlett-Packard Co. (HPQ) plans to cut 27,000 jobs as the growing popularity of smartphones, the iPad and other mobile devices makes it tougher for the company to sell personal computers.

The cuts announced Wednesday represent HP's largest payroll purge in its 73-year history. The reductions will affect about 8 percent of HP's nearly 350,000 employees by the time the overhaul is completed in October 2014.

Word of the mass layoff had leaked out in media reports late last week, so the news didn't come as a surprise.

HP hopes to avoid as many layoffs as possible by offering early retirement packages.

The company, which is based in Palo Alto, Calif., expects to save as much as $3.5 billion annually from the job cuts and other austerity measures.

HP CEO Meg Whitman plans to funnel most of the savings into developing more products and services that could help the company adapt to technological shifts. Those changes are driving demand for more mobile computing and for software that is provided over high-speed Internet connections, rather than installed on individual computers.

Investors seemed to be delighted with the shake-up. HP's shares surged $2.42, or more than 11 percent, to $23.50 in extended trading Wednesday after the announcement.

"Work force reductions are never easy," Whitman said in a conference call Wednesday with analysts. "They adversely impact people's lives, but in this case, they are absolutely critical to the long-term health of the company. Our goal is simple: a better outcome for the customers at reduced cost for HP."

Whitman's crackdown will immediately change the leaders within HP's recently acquired Autonomy division, which makes software for searching for information within companies and government agencies.

Bill Veghte, HP's chief strategy officer, is replacing Autonomy founder Mike Lynch in an effort to boost the division's financial performance. The shake-up is likely to amplify investor questions about whether HP blundered last year when it paid $11 billion to buy Autonomy. That deal was announced in August by Whitman's predecessor, Leo Apotheker, just a month before he was fired.

News of the cutbacks overshadowed the release of HP's latest quarterly results.

The company earned $1.6 billion, or 80 cent per share, during the three months ending in April, its fiscal second quarter. That represented a 31 percent decline from $2.3 billion, or $1.05 per share, at the same time last year.

If not for several items unrelated to HP's ongoing business, the company said it would have earned 98 cents per share. That figure topped the average estimate of 91 cents per share among analysts surveyed by FactSet.

Revenue for HP's fiscal second quarter fell 3 percent from last year to $30.7 billion. That was about $800 million above analyst projections.

"I wouldn't say we have turned the corner, but we are making progress," Whitman told analysts.

To pay for severance and other restructuring costs, HP expects to take a pre-tax charge of about $1.7 billion in the current fiscal year, which ends in October. It expects to take charges of an additional $1.8 billion through fiscal 2014.

[notyrants]

askagain May 24, 2012 6:22 AM EDT
correction

The HP layoffs are a good example of why we should all be working for the government. The government does not have to produce anything to sell and your job isn't dependent upon the sale of products. As long as goverment can keep raising taxes, your job is safe. At least, that is what the citizens of Greece thought and look at their economy.
-------------------
I think what's sorely needed in the United States of America is HOW MUCH the private sector depends on the taxpayer and BIG government. The private sector depends so much on BIG government that it has one up on the people on a global scale with BIG GOVERNMENT unions designed for the phony pick yourself up by your own bootstraps private sector. These unions are known as NAFTA, CAFTA and GAFTA.

The private sector saddled with the corporate legal construct creates a huge threat to democracy as corporations run more like Mubarak's dictatorship instead of like systems that represent the interests of the greater percentage of the population.

[tmittelstaed]

65 posts by idiots who know nothing about the computer industry.

HP stumbled because they did not release a tablet that ran Android. Instead they pushed WebOS which died and are pushing Windows 7 on a tablet. Who the heck wants that?

Customers are buying Android tablets they are not buying Windows tablets. HP hitched it's star to Microsoft and got screwed like dozens of other companies before them.

HP also misread the market and didn't realize that consumer purchasing of PCs was going to tank during the Great Recession. Business purchasing held the industry up.

HP makes top of the line servers. Their laptop line is iffy - some are good, some are bad. I'm typing this on a Pavilion g7 which worked much better once I kicked it from 4 to 8GB of ram. And their desktop line is really no better than any other name-brand desktop.

What HP needs in the PC realm is to concentrate on the basics of customer satisfaction and making products that people are buying from others - like Android tablets.

[askagain]

tmittelstaed - Your post isn't any better than many that preceded your post. In fact, you simply repeated what some other people already said. What makes "65 posts by idiots" (your words) is a purely subjective opinion.

[bobnjersey]

[HP stumbled because they did not release a tablet that ran Android.]
----------------------------------------
this must explain apple's failings as well.

[askagain]

The HP layoffs are a good example of why we should all be working for the government. The government does have to produce anything to sell and your job isn't dependent upon the sale of products. As long as goverment can keep raising taxes, your job is safe. At least, that is what the citizens of Greece thought and look at their economy.

[askagain]

correction

The HP layoffs are a good example of why we should all be working for the government. The government does not have to produce anything to sell and your job isn't dependent upon the sale of products. As long as goverment can keep raising taxes, your job is safe. At least, that is what the citizens of Greece thought and look at their economy.

[nancy_naive]

That would be true, if the gov't really didn't produce anything. But' as it turns out our infrastruct is gov't built, our defense, our R&D is nearly all gov't funded.

[notyrants]

Meg, there is not end to the bottomless pit of greed beholden to a psychopath.

[realtimecoffee]

Look, I wouldn't buy HPQ in a million years, but 75% of their stock is owned by institutions, and a big chunk of that is government retirement funds. They vote to fire and hire the company management, and then breathe down their throats for a bigger bottom line. To do that they lay people off. It's a vicious circle. As Slow meantioned below, Hewlett-Packard has a history of poor decision making. Much of this trouble goes back several Management generations. Whether Mz Whitman turns out to be good or bad for the company remains to be seen, but switching to products people might buy seems to me like a step in the right direction. And as was also alluded to below, many of these people will cross the street to Apple.

[konr22]

Meg "Wall street" Whitman - she still has a job! Not Governor of California, but a damn good job. What a joker! 27,000 layoff!!!! Looks like California caught a break.

[realtimecoffee]

Things aren't looking so good under Gov. Moonbeam either. All the big government ponzis are coming home to roost. A chicken in every pot sounds good until you run out of chicken.

[Scimajor]

"restructuring"

What a lovely word for "screwing over 27,0000 loyal employees and their families"?

I'm sure the executives that made the decisions leading to the loss of profitability (the same ones that make 100 times the salary of the common employee) leading to the "restructuring" are safe or are getting a lovely golden handshake.

[76SpiritOf]

That's what crony capitalism is all about!

Bring in one of you unqualified members of the millionaire's club, give them a huge salary and let them drive the company into a trainwreck. When they fail you just layoff the middle class workers and everything is good again, at least for the CEO.

[realtimecoffee]

Better to stay with the same old same old and then lay off 350,000 when they go belly up? I wish someone would offer me early retirement. That doesn't sound like such a hardship. The truth is they are blacksmiths in a rubber tire world. (Think Kodak) As long as you and I demand more cheap imports this will only spread.

[smittyc]

It's just the first round of layoffs for HP and most likely the beginning of a host of layoffs in silicon valley. HP will have to get rid of a good one-third of their 350,000 employees to offset the loss of Home computers sales that have been replaced by smart phones. Their bread and butter, the sale to businesses is also under seige, their stock price did not drop from the high forties to the low twenties during a bull market because they have their ducks in a row, that's for sure. They are a fine company, have produced many wonderful products, I wish them good luck going forward.

[slownewsday_5000]

Ducks in a row??? Do you not realize that HP has been plagued by management problems for a decade?

The quality of their products dropped as a result, as well. I used to purchase HP exclusively, but stopped when they went downhill on product quality.

[smittyc]

Actually Slow, HP stock was high 40s when Hurd was running the show, about two years ago, he moved on to Oracle after a scandal broke concerning him and a employee. Hurd was a sharp foresightful individual, his departure shook up the stock holders who obviously had little faith in Apotheker, the stock tanked and Meg Whitman became available after she lost to Brown for the governorship of Ca. If you read my post carefully, I am stating they don't have their ducks in a row currently and that is why they are reorganizing.

[fastdraw2]

What do you want to bet the layoffs consist entirely of those employed in the United States instead of the tens of thousands HP has employed overseas.

[tmn]

Unfortunately, you are probably right on the money.

[WiseAsOwl]

I'm afraid you're right....

[roadracer9x]

And just down the road (in some cases across the street), Apple is hiring 100s of new employees and renting/buying up real estate to house them.

[skeezix06]

Thereby ensuring that I will never purchase another Hewlett Packard Product.