Posted on 05/17/2012 3:37:09 PM PDT by John W
The daunting task of restructuring Hewlett-Packard will begin in earnest next Wednesday when the company reports its quarterly earnings. Sources familiar with the company’s plans say that CEO Meg Whitman will discuss the opening steps of a company-wide restructuring plan that will include the elimination of about 30,000 jobs.
A report by Business Insider yesterday pegged the range of cuts at HP to between 10 percent and 15 percent of its current work force of 320,000 people. But sources familiar with HP’s plans tell AllThingsD that the cuts will be carried out over a relatively long period of time, perhaps a year or more. A report by Bloomberg News out minutes ago puts the target at 25,000. The exact number of cuts, one source told me, is still considered a “moving target” and could grow or shrink.
Additionally, sources say, Whitman will, during a conference call with analysts, portray the cuts as necessary — not to bolster HP’s earnings and satisfy shareholders, but rather as a means to make needed investments. On this point, Whitman will be borrowing a bit from the playbook of her short-lived predecessor, former HP CEO Léo Apotheker.
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. 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.”
Much like what happened at networking giant Cisco Systems, the restructuring will include a combination of voluntary retirement packages, the precise details of which are still under consideration, combined with outright cuts. The target for voluntary retirement, sources tell me, is about 5,000 people.
Brian Marshall, an analyst with ISI, in a May 3 note to clients estimated that a job reduction of about 18,000, amounting to about 5 percent of HP’s work force would, would save HP in the neighborhood of $1.2 billion and boost year-end earnings per share by about 50 cents, assuming a cost of about $100,000 per employee. “If HP institutes a reduction in force as we expect, we wouldn’t be surprised if calendar year 2013 EPS estimates eventually approach $5.00 as the business stabilizes, growth returns in the Jan 2013 quarter and the organization is streamlined,” Marshall wrote.
HP computers suck .
They have been that way for years.
More fallout from hope and change.
If the stimulus would have been in the form of
investment tax credits, HPQ would be flying high,
But 0 knows best how to invest tax dollars (not).
HP was an incredible company back when the founders still ran it. I'm thinking of a stock strategy: sell short on the news of a female CEO being appointed.
A shocking failure rate. Equally shocking is the seemingly intentional devaluing of the HP name. It’s the reason that Carly Fiorina was and is a non-starter as a political candidate no matter what her views. She trashed a brand and alienated thousands including the namesakes’ families.
Got that right. Decent printers up to a few years ago.
Maybe their consumer grade computers to, but their servers and network switches ROCK!
But the economy has really hurt HP. Most companies with substantial IT departments used to be on a 3 year lease plan, replacing servers every 3 years. Our corporate policy is now to only replace servers when we are forced to. Given the fact we have nearly 200 servers, that hurts HPs profits.
Mark
You may have a point. Who was the woman CEO at HP before Whitman? I recall she was the one who WRECKED Lucent, which at one time, was Bell Labs!
Mark
New IBM CEO Virginia Rometty looks like she will be a similar disaster.
This is not to say that women cannot be CEOs, just that CEO should not be a job subject to affirmative action, in the sense of somebody saying "it's time we appointed a woman" rather than "who is the best candidate".
“But the economy has really hurt HP. Most companies with substantial IT departments used to be on a 3 year lease plan, replacing servers every 3 years. Our corporate policy is now to only replace servers when we are forced to. Given the fact we have nearly 200 servers, that hurts HPs profits.”
Two things have hurt IT companies generally. They outsourced chasing cheap labour but that labour is not so cheap any more. Second, server vitalization allows companies to do just as much with 20% or so of what they used to need for hardware. Yep, globalization and the cloud are job killers...that and being late to the table with many technologies as HP has.
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