Irish workers await fate as HP to cut 8% of jobs
TECHNOLOGY giant HP is to cut its workforce by 8 per cent over the next few years as it aims to trim costs and kick-start its growth again. About 27,000 jobs will go under the plan, which the firm says will save up to $3.5 billion annually by 2014.
Savings from the cost cuts will go towards increased investment in research and development, especially in printing and PCs.
HP employs about 300,000 people around the world. It has an Irish workforce of about 4,500 people in its plants in Leixlip, Co Kildare, and Galway. It is not yet known how the cuts will affect the Irish operations, with the company saying plans would vary by country, based on local legal requirements and consultations.
However, a spokesman for the firm noted that chief executive Meg Whitman had said the plan was broad-based and would “touch all of HP”.
“While some of these actions are difficult because they involve the loss of jobs, they are necessary to improve execution and to fund the long-term health of the company,” she said.
A third of the cutbacks will be in the US and the scale of the redundancies will be dictated by how many staff opt for an early retirement programme on offer. The cutbacks are expected to be implemented by the end of HP’s fiscal year 2014. The company will take a pretax charge of $1.7 billion in fiscal 2012 related to the layoffs.
The announcement comes after HP reported a 31 per cent fall in second-quarter profit and a 3 per cent decline in revenue, compared with a year ago. The results, however, were better than Wall Street expectations.
HP reported second-quarter net income of $1.59 billion, or 80 cents a share, compared with $2.3 billion, or $1.05 a share, a year ago. Revenue of $30.69 billion was down 3 per cent compared with the same period last year.
Excluding after-tax costs for amortization, restructuring charges and acquisition-related charges, HP said it earned 98 cents a share, compared with analysts’ average estimate of 91 cents.
Ms Whitman, who has been at the helm for six months, said the company also planned to launch tablets – for both consumers and corporations – later this year.
“We will have a Windows 8 tablet for the holiday,” she said. This would be HP’s second attempt in the tablet market. HP killed its previous WebOS-based TouchPad tablet last year after just seven weeks, citing poor demand.
Ms Whitman also said HP’s acquisition of British software company Autonomy for over $11 billion is facing challenges and results in the division fell short of HP’s expectations. HP has moved the division under its chief strategy officer Bill Veghte. Autonomy founder Mike Lynch will be leaving the company.
Results from HP’s other divisions were also weak.
Sales from the personal systems group, encompassing PCs, were flat with a decline in sales to consumers offsetting revenue from commercial clients. Revenue from its bread-and-butter printing group, which is being merged with the PC group, fell 10 per cent after weak demand. Sales of enterprise servers, storage and networking equipment fell 6 per cent.