Hewlett-Packard's restructuring is reportedly expected to eliminate 9,000 jobs in the U.S. - representing about a third of the
27,000 positions HP plans to ax over the next two years. The 9,000 jobs, according to a Bloomberg report, are expected to focus on retirement offers as well as layoffs. The company reportedly has a
goal of 5,000 retirements, though that could be a global figure. The plan is to slash about 8 percent its workforce, which currently stands at 349,600 employees. HP's cuts will be deeper in the U.S. - accounting for 10.3 percent of an estimated 87,500 U.S. workers. HP’s no stranger to massive, multiyear layoffs. In June 2010, it announced it was cutting about 9,000 positions; in 2008, it bid adieu to 24,600 and 14,500 in 2005. Analysts remain skeptical of Whitman’s turnaround plan, with Chris Whitmore of Deutsche Bank Securities using the headline, “New sheriff, old game plan” on his note to clients. No unit of the company is to be spared, according to Chief Financial Officer Cathie Lesjak. The enterprise services group is expected to take the biggest hit of HP's business groups. Bloomberg previously reported that the unit could lose 10,000 to 15,000 people. Headcount in that unit soared with the $13.2 billion acquisition of Electronic Data Systems in 2008.
Strategic Job Cuts
In March, CEO Meg Whitman put HP’s U.S. headcount at 87,500, including 16,000 in California, according to a SiliconValley.com report. HP aims to save $3 billion to $3.5 billion with its restructuring and plans to plow back the savings into research and development. “This is quite different from the cost-cutting that [former CEO] Mark Hurd undertook,” Whitman told Bloomberg. “This is about fundamental business-process re-engineering.” The company said the reduction in force began last Oct. 31 and will continue through fiscal year 2014. Although HP is looking at a sizable layoff, the company apparently is still in a hiring mode. HP lists 281 open engineering jobs on its Web site, ranging from various projects and positions like
WebOS, wireless software and UI design.
HP's R&D Stands To Gain
With the savings from its reduced headcount, HP expects to increase its investment in research and development from 3 percent of sales to 5 percent. Whitman, in an internal video, says:
- Services will invest in cloud, analytics, and high-value delivery.
- Software will invest in analytics, big data, application management and security.
- The servers, storage, and networking unit will bet on cloud and big data technologies.
HP also stressed it will invest in career training and development and may make more aggressive changes in its leadership, Whitman says. Michael Lynch, founder and CEO of Autonomy, which HP acquired last year for $10.3 billion is one of the first to go, under Whitman's restructuring. His departure comes after "a very disappointing" quarter for licensing revenue. The Autonomy acquisition was initially touted as a way for HP to gain leadership in unstructured data searches. Bill Veghte, HP's chief strategy officer and executive vice president of HP Software, is replacing Lynch.
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Hewlett-Packard's restructuring is reportedly expected to eliminate 9,000 jobs in the U.S. - representing about a third of the 27,000 positions HP plans to ax over the next two years. The 9,000 jobs, according to a Bloomberg report, are expected to focus on retirement offers as well as layoffs. The company reportedly has a goal of 5,000 retirements, though that could be a global figure. The plan is to slash about 8 percent its workforce, which currently stands at 349,600 employees. HP's cuts will be deeper in the U.S. - accounting for 10.3 percent of an estimated 87,500 U.S. workers. HP’s no stranger to massive, multiyear layoffs. In June 2010, it announced it was cutting about 9,000 positions; in 2008, it bid adieu to 24,600 and 14,500 in 2005. Analysts remain skeptical of Whitman’s turnaround plan, with Chris Whitmore of Deutsche Bank Securities using the headline, “New sheriff, old game plan” on his note to clients. No unit of the company is to be spared, according to Chief Financial Officer Cathie Lesjak. The enterprise services group is expected to take the biggest hit of HP's business groups. Bloomberg previously reported that the unit could lose 10,000 to 15,000 people. Headcount in that unit soared with the $13.2 billion acquisition of Electronic Data Systems in 2008.
