Hewlett-Packard Co. plans to axe between 11,000 and 16,000 positions from its operations worldwide by October 2015, adding to some 34,000 positions it was already in the process of eliminating. The new cuts, announced on Thursday, will be completed in 2015.
“No company likes to reduce their workforce,” CEO Meg Whitman said in a conference call. “But the reality is that HP must be maniacally focused on continuous improvement in our cost structure.”
As reported in Computerworld, the cuts will hit across almost all of HP’s business units and geographies, and are projected to save around US$1 billion.
The announcement came as HP reported increased profits this week, with its mainstay PC business showing good results.
Unlike the earlier cuts, these come not as the result of a poor financial performance. HP’s revenues have improved since 2012, and earnings for the quarter ended April 30 were US$1.27 billion, up 18% from the same quarter last year.
The company’s Personal Systems Group, which makes laptops and PCs, turned in a strong quarter thanks to business sales, a good sign given that PSG was among the company’s more troubled divisions a couple of years ago. PCs remain the company’s main product.
Meanwhile the printing, enterprise computing and enterprise services groups all lost ground. HP’s x86 server business grew by a paltry one per cent, while storage and high-end server sales were off.
Converged storage systems, including 3Par equipment, were also down. Computerworld attributes the losses to the fact that buyers have a wider range of storage choices than ever before, including flash and thin provisioning systems. However CEO Meg Whitman says HP expects the business to pick up in the next six months.
HP (Nasdaq: HPQ) has had big hopes for its high-density Moonshot servers, introduced last year. But the technology has been slow to take hold. Whitman says the technology has more than 100 beta customers, but servers aren’t a fast-uptake segment and HP doesn’t expect Moonshot to produce significant revenue any time soon.
The company has almost completed the elimination of 34,000 positions begun a couple of years ago as part of a huge restructuring plan – the third largest job cuts ever in the IT sector. The total of that layoff and the ones announced this week could reach 50,000, or 15% of the company’s total global workforce of 317,500.
In a statement, Whitman said HP’s turnaround strategy is on track.
“We’re gradually shaping HP into a more nimble, lower-cost, more customer and partner-centric company that can successfully compete across a rapidly changing IT landscape,” she said. “Looking forward, I’m excited about the strength of our product lineup.”
The company says it plans to invest the savings from the latest cuts in new technologies. While yesterday’s announcement didn’t specify what those technologies would be, HP has gone on record recently that it plans to enter the growing 3D printing market. It has also publicly announced plans to put US$1 billion over two years into extending its portfolio of cloud computing products and services.