HP May Cut 8-10% of Workforce Starting Next Week

Hewlett-Packard may cut its overall workforce by 8 to 10-percent, or a minimum of 25,000 jobs, starting next week. The details are slim for the moment, but a source close to the situation told Reuters that the cut may even include forced early retirements for around 5,000 people. The cuts are currently under discussion, and have not yet been finalized.

Bloomberg adds to the report, stating that the number includes 10,000 to 15,000 from HP’s enterprise services group. This department, which sells a range of information-technology services, has been beset by declining profitability.

The cut is part of newly installed CEO Meg Whitman's overall plan to return the Silicon Valley company back into positive growth. PC sales are reportedly dropping due to consumer favoritism towards tablets. The company has also been slow to shift away from IT services and focus on the current trend of cloud computing.

By eliminating 18,000 jobs, HP could save up to $1.2 billion, and add 50 cents to its annual per-share earnings. The company is reportedly working with management consulting firm McKinsey & Co. to draw up the job-cuts plan which Whitman is expected to reveal during the company's quarterly earnings call next Wednesday.

AllThingsD reports that the cuts won't be immediate: they will be carried out over a relatively long period of time, possibly a year or more. The exact number of the cuts is still unknown and considered a "moving target" that could grow or shrink before next week. Whitman is expected to say that the cuts are required to make needed investments.

"Whitman will argue that many of the cuts made at HP during the five years that Mark Hurd was at its helm were made without corresponding investments in new and growing initiatives," reports AllThingsD Arik Hesseldahl. "This 'cut and reinvest' theme will apply across the company, sources tell me. The process has been an intense one among HP’s senior executive ranks and has, as one source put it, 'consumed the company.'"

After the report of HP's possible job cuts surfaced, company shares dropped but then quickly rose upon news of restructuring. By 3pm EST shares were $22.10, and then $22.27 by the end of the day. The stock had already dropped 14-percent this year before Thursday's report.

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  • wannabepro
    1 CEO's salary cut, saves 1 million. ^^^

    15,000 x $50k = $750,000,000

    The best way would be to cut corporate taxes.
  • rdhood
    The best way would be to cut corporate taxes.

    Fail. You assume that HP would not cut those people if their corporate taxes were cut. They would cut anyway. HP has cut a hundred thousand jobs over the last 10 or 15 years, even in times of prosperity. I was laid of (everybody in my group) a few years ago, during a quarter in which HP came in "above expectations" and made billions. HP became a dysfunctional hire-and-fire company, starting with Carly Fiorina, and continuing through MW. Corporate taxes has got nothing to do with it.
  • ananke
    Corporate taxes doesn't matter to a multinational corporation. The profits are expatriated to the lowest taxing territory anyway, through trade and accounting approaches, and taxes are minimized. The corporation eventually pays minimal taxes in the US, BUT the Americans employed pay income, wealth, sales etc. taxes. Hence, when you have loss of American jobs, the revenue to IRS goes down, regardless of the corporate taxation level. In fact, corporate and wealth taxes must be zero, if you want to compete with Swiss, Singapore, etc., and eventually rely only on personal tax revenue.

    Btw. I was working in HP finance at one point.