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With Another Sales Drop, HP Cuts Up to 16,000 More Jobs
Posted May 23, 2014
With Another Sales Drop, HP Cuts Up to 16,000 More Jobs
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By Barry Levine. Updated May 23, 2014 2:49PM

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Hewlett-Packard is again cutting jobs. On Thursday, the company announced it would be eliminating 11,000 to 16,000 jobs -- on top of earlier plans to cut 34,000 positions.

About $1 billion will be saved by the newly announced layoffs, on top of the $3.5 billion to $4 billion in savings from the previous layoffs. About 317,000 employees were on the payroll at end of 2013. The company indicated the layoffs will be spread among countries and departments, although it will continue to add R&D positions.

The move was presented by HP on Thursday along with its second-quarter results. There was a 1 percent drop in quarterly earnings, the 11th straight decline in quarterly sales. Earnings for the fiscal second quarter ending April 30 were $1.3 billion, compared with $1.1 billion in the same quarter last year. Sales were $27.3 billion, while Wall Street projections had been $27.41 billion. Investors have generally reported being pleased with HP's financial progress over the last two quarters.

PC Sales Up

CEO Meg Whitman told Reuters news service that the company would be looking to cut back in "areas not central to customer-facing and innovation agendas," and said R&D spending has been increased.

The layoffs are part of a restructuring under Whitman, as HP attempts to re-orient itself in the face of changing market conditions. However, PCs still represent the largest portion of the company's revenue, bringing in $8.2 billion last quarter. PC sales rose 7 percent over the previous quarter, thanks largely to sales to enterprises, but they also have the lowest profit margin of the company's businesses.

Some analysts have suggested that this boost in PC sales may have been a blip of upgrading, driven by Microsoft's ending of its support for Windows XP. In order of revenue, the next lines of business are enterprise products, printers, enterprise services, and software.

'Not at All Disappointed'

Whitman told The Wall Street Journal that she's "not at all disappointed" in having to lay off tens of thousands of employees. "It's the natural course of what makes sense in a turnaround of this size and scale," she told the publication. She did acknowledge "it is difficult for employees," and added that workers know the company can be more efficient.

The company also announced some executive changes. Executive Vice President George Kadifa, head of software operations, will be replaced by the head of the Autonomy analytics unit, Robert Youngjohns. Kadifa will now be in charge of software operations. Additionally, the head of the server business, Antonio Neri, will now run networking.

HP has also been announcing several low-end products. Earlier this week, it released a 7-inch Android tablet priced at $99. While relatively low-powered compared with higher-priced competitors, the model does offer a basic tablet at a cheap price from a known brand. In June, the company is expected to release its $200 Chromebox, employing Google's Net-based Chrome operating system.

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