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HP Plans to Cut 30,000 Jobs

22 May 2012

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CEO HP,  Meg Whitman

By Linda Eroke  

Hewlett-Packard's Chief Executive Officer (CEO), Meg Whitman, plans to cut 30,000 or more jobs this week, according to officials familiar with the plan.

Her goal, they said, was to spend the money she saved, on increasing the efficiency of the company's sales force and on creating new products.

Whitman, the CEO since last September, is said to be focused on efficiency and new products.

The executives, according to a report by the Jarkata Post, said last Friday that HP would seek layoffs and voluntary retirements from across the company. The total could be as much as 10 per cent of HP's 324,000-strong work force.

China, one of HP's highest growth areas, will probably be spared, as will its research and development efforts.

The cuts rank among the largest by big US companies since the financial crisis triggered a recession in 2008, according to the outplacement firm Challenger Gray & Christmas.

Citigroup had cut 50,000 workers in November 2008, Circuit City Stores got rid of 34,000 in January 2009, General Motors eliminated 47,000 jobs in February 2009, and Bank of America cut 30,000 workers in September last year.

Other technology companies have shed large numbers of employees.

Sony said last month that it would eliminate about 10,000 jobs, or about 6 per cent of its staff. Cisco Systems last year cut 6,500 jobs, about 9 per cent of its workforce, and sold off a factory that employed about 5,000 additional people.

Whitman “is trying to build a new company”, one senior executive said of the job cuts.

Considered a slow-moving giant in the tech industry, HP had revenue of $127 billion in the last fiscal year, but net earnings of just $7.1 billion.

While it has a leading position in the sales of low-margin personal computers, HP has been late or unsuccessful in many recent tech trends such as providing cloud computing services for big companies and smartphones and tablet computers.

Whitman's new HP seems unlikely to abandon any of its major businesses, which besides PCs and printers includes selling computer servers and data storage systems, consulting, and providing low-end services like managing call centers.

Whitman has said owning so many large businesses enables HP to acquire components cheaply through one of the largest supply chains in high technology, and to provide a one-stop shop for corporate tech. Critics charge it encumbers HP, particularly at a time of rapid change.

Some of HP's problems stem from executive turmoil. Whitman's predecessor Leo Apotheker served less than a year, during which time the company lost about 43 per cent of its share price, or more than $32 billion in market capitalisation.

According to the report, an expensive acquisition, unsuccessful products like a tablet computer and confused messages led to his dismissal.

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