HP Plans to Eliminate 9,000 Jobs over Next 3 Years
Following a steady stream of acquisitions, including EDS, 3Com and Palm, Hewlett-Packard announces plans to cut about 3 percent of its workforce over three years, eliminating 9,000 jobs. The hardware and services company says it plans to add 6,000 jobs in sales and services during the same period.
Hewlett-Packard plans to cut about 3 percent of
its workforce, or about 9,000 jobs out of 304,000, as it restructures and
consolidates its Enterprise Services business, invests more in cloud computing
and automation, and updates its data centers, company representatives said in a
conference call June 1 with analysts and stockholders. The company is taking a
multiyear charge of $1 billion for severance and asset impairment charges and
expects to see "annualized gross savings of approximately $1 billion and
net savings after reinvestment in a range between $500 million and $700
"Over the past 20 months, we focused on integrating EDS and improving profitability," Tom Iannotti, senior vice president and general manager of HP Enterprise Services, said in a statement. "Now that the integration is largely complete, we have identified significant opportunities to grow and scale the business. These next-generation services will enable our clients to benefit from the combined technology and services leadership that only HP offers."
For HP, announcements of restructuring leading to employee layoffs are nothing new, as acquisitions generally mean job redundancies. Major acquisitions have historically lead to job cuts at the infrastructure and services giant. HP continues to gobble up name-brand technology companies across a competitive spectrum of IT services, operating systems and hardware. Over the last eight years, HP has acquired Compaq, EDS, 3Com and, most recently, mobile operating system and device maker Palm, as well as many smaller and midsize technology companies.
HP has followed nearly every acquisition announcement with organizational restructuring and workforce reductions. Since 2005, under the helm of CEO Mark Hurd, HP has announced nearly 50,000 eliminations of jobs as part of restructuring and cost-trimming efforts. In a conference call in 2008, Hurd told analysts and stockholders, "We've acquired 30 companies over the past four years ... We're good at it."
In 2005, HP restructured and eliminated 14,500 jobs; in 2008, after the $13.9 billion EDS acquisition, HP announced 24,600 job cuts. In March 2009, U.S.-based EDS employees who made more than $40,000 in salary were forced to take base pay cuts of 10 percent on top of February 2009 base pay cuts in the range of 5 to 10 percent depending on job level.