Connect to share and comment
Hewlett-Packard Co. confirmed rumors of massive job cuts at the Palo Alto, Calif.-based company.
Hewlett-Packard Co. today confirmed rumors of massive job cuts at the Palo Alto, Calif.-based company. The world’s largest personal computer and printer manufacturer said it will shed 27,000 jobs, or about 8 percent of its workforce, by next year, CBS News reported.
More from GlobalPost: Hewlett-Packard to cut 30,000 jobs: sources
"These initiatives build upon our recent organizational realignment, and will further streamline our operations, improve our processes, and remove complexity from our business," CEO Meg Whitman said in a statement, the San Jose Mercury News reported. "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. We are setting HP on a path to extend our global leadership and deliver the greatest value to customers and shareholders."
HP expects to save around $3.5 billion a year by Oct. 2014 by axing jobs, CBS News reported.
The company revealed that a large number of job losses will occur in its enterprise services group, which manages data centers and provides technology consulting, Bloomberg News reported.
According to Bloomberg News:
Services demand has slowed, and the division’s profitability has declined amid competition from companies such as International Business Machines Corp.
The job cuts are the largest staff reduction effort in HP’s 73-year history, CBS News reported. In 2008, the company said it would eliminate 24,600 jobs over three years and, in 2010, it announced it would cut about 9,000 workers over several years, the San Jose Mercury News reported.
Analysts said they didn’t expect the job cuts to be a quick fix to HP’s problems.
“The downside to this restructuring is it’s going to cost money, not to mention morale,” Shaw Wu, an analyst at Sterne Agee & Leach Inc. in San Francisco, told Bloomberg News.
“We view any restructuring announcement as a positive move, but one that will take several years to sustainably improve margins, EPS and free cash flow,” Katy Huberty, an analyst at Morgan Stanley in New York, said in a May 17 research note, according to Bloomberg News.
More from GlobalPost: Turkey’s woman at the top