Hewlett-Packard cutting 27,000 jobs
Hewlett-Packard plans to jettison 27,000 workers 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 the HP's largest payroll purge in its 73-year history. The reductions will affect about eight percent of Hewlett-Packard Co.'s nearly 350,000 employees by the time the overhaul is completed in October 2014.
HP has 7,000 employees in Canada at 28 offices across the country, but it was not immediately clear what impact the layoffs would have here.
In a release, the company said "workforce reduction plans will vary by country, based on local legal requirements and consultation with works councils and employee representatives, as appropriate."
It hopes to avoid as many layoffs by offering early retirement packages.
The company, which is based in Palo Alto, Ca., expects to save as much as $3.5 billion US 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 that are driving demand for more mobile computing and software that is provided over high-speed Internet connections.
"While some of these actions are difficult because they involve the loss of jobs, they are necessary to improve execution and to fund the long term health of the company," Whitman said in a statement.
As part of shake-up, Whitman is also bringing in a new leader for HP's 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.
HP bought Autonomy for more than $10 billion last year before the company named Whitman as its CEO.
Earnings decline
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 per cent 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 three per cent 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.