HP Ups Layoff, Buyout Head Count to 29,000 by 2014

By Chris Preimesberger  |  Posted 2012-09-10

Hewlett-Packard (HPQ), which is ramping up the largest employee layoff and buyout in its 73-year history, is trimming another 2,000 jobs above and beyond the 27,000 it said back on May 23 it would have to cut.

In a Securities and Exchange Commission filing on Sept. 10, HP updated its workforce reduction to 29,000, spread out over the next two years. The company's plan is aimed at U.S. employees whose combined age and years of service equals 65 years or more.

If indeed 29,000 of the company's current 349,600 full-time employees are let go or retire by Oct. 31, 2014, as is the plan, that will encompass 8.3 percent of HP's total worldwide head count.

HP reported an $8.9 billion Q3 2012 loss on Aug. 22, its largest ever. The company's stock has been problematic. It was selling for $29.89 last February but has slipped 58 percent in six months to $17.43, which was where it closed on the Nasdaq Exchange Sept. 10.

Many Choosing Early Retirement

About 8,500 employees have elected to accept early retirement, with most leaving the company by fall 2012. In the SEC affidavit, HP said it is paying lump-sum benefits of five to 14 months' salary, depending on years of service.

Palo Alto, Calif.-based HP has long been known as an employer with workers who often spend their entire careers there.

About 3,800 people were laid off in the last quarter, HP said.

eWEEK learned from a trusted source that a substantial number of those 29,000 cuts-possibly as many as 15,000-will come at the expense of the company's Texas-based HP Enterprise Services division, formerly known as Electronic Data Systems, or EDS. HP bought EDS, which was founded in 1962 by H. Ross Perot, for $13.9 billion in 2008.

HP said it expects to save as much as $3.5 billion per year from the job cuts and other internal fiscal measures.

HP is calculating a total of $129,629.63 for each of those employees, give or take a few dollars and people. That, of course, would include salary, benefits, retirement and other categories for each person.

Is HP Throwing in the Towel on Services?

Why exactly is HP cutting back so severely its service force? Is it giving up in its decades-long turf war with IBM, and allowing newer kids on the block (Oracle, Dell, EMC and Cisco Systems) to move in?

HP isn't talking about this except to acknowledge that the services division has been underperforming, but you can bet the answer would be a stout "no." The relevant terms here are "streamline" and "more efficient operations." HP is not only trimming a lot of service-related jobs, but it is also becoming a more efficient company internally in order to save costs.

It is well-known also that HP wants to turn resources to its new Converged Cloud initiative to help refresh some of those thousands of data centers that need updates.

Chris Preimesberger is Editor of Features and Analysis at eWEEK. Twitter: @editingwhiz

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