HP revenue fall prompts cuts in pay and benefits

POOR SALES of PCs, servers and printers during the first quarter have prompted HP to reduce its full-year outlook and introduce cuts in pay and benefits for staff.

The world’s largest PC maker said it expected the market conditions of the first quarter to persist for the year and, combined with the effect of unfavourable exchange rates, HP said it was reducing its revenue outlook for the full year by $14 billion.

“We just don’t want to bank on the fact that the economy is going to get better,” said chief executive Mark Hurd.

Revenues for the first quarter to the end of January came in at $28.8 billion, up 1 per cent from 12 months ago or 4 per cent on a constant currency basis. HP generated an operating profit of $2.5 billion, a drop of 5 per cent.

Revenues at the personal systems group, which sells notebook and desktop computers, were down 19 per cent to $8.8 billion on the back of a 4 per cent fall in PC shipments.

Mary Lou Nolan, a director of HP Ireland, said the performance of the technology firm in Ireland was broadly in line with the global results, with revenues up 1 per cent year-on-year. Against a backdrop of a contraction in the local IT market and currency fluctuations, she said it was a “good result”.

Ms Nolan said revenues were flat in the enterprise market but the firm grew market share by 5 per cent, reflecting falls in the price of technology products. She said the recession was causing customers to invest more in software as it offered a chance to “improve processes and drive out costs”.

Irish customers were also making more use of HP Financial Services, which is offering zero per cent finance for IT projects.

HP announced Mr Hurd’s base salary would be cut by 20 per cent, that of management by 10 per cent and junior employees would lose between 2.5 and 5 per cent. It also announced reductions to pension contributions and changes to its share option scheme.

Mr Hurd was paid a salary of $1.45 million last year but got bonuses totalling $23.9 million.

Ms Nolan said it was too soon to give any details of how the reductions would affect the Irish workforce of just over 4,000.