HP To Axe More Jobs As Growth Stalls
Staff at HP are braced for yet another round of swingeing job cuts as the tech giant stumbles in its recovery
Hewlett-Packard announced it may axe up to 16,000 staff, as the ongoing turnaround plan of CEO Meg Whitman struggles to restore the growth prospects at the company.
The job losses come after a disappointing performance for the tech giant in the most recent financial quarter.
Job Losses
Whitman insisted on Thursday that her turnaround plan is on track, but admitted in a conference call that another 11,000 to 16,000 jobs would be axed. This is on top of the ongoing job reduction program at the company.
In May 2012 HP confirmed long standing rumours and officially announced that it would axe 27,000 jobs, as part of its “2012 Plan”. Then in September 2012, HP increased the number of positions to go to 29,000 staff, as part of radical changes designed to turn round the fortunes of the PC maker.
Then in December it revealed it would axe 34,000 jobs in total from its 250,000 global workforce. The UK alone has already seen five percent of the HP workforce being handed their P45s.
The additional job losses of up to 16,000 will be on top of those figures, and means that HP will axe 50,000 jobs in total. The job losses underline the difficulties that HP has as it seeks to re-establish itself in an increasingly mobile-oriented world, and reduce its reliance on commodity items such as printers and PCs.
Revenue Decline
Matters have not been helped by HP’s latest set of financials either.
For the past two quarters, HP’s performance seemed to have stabilised somewhat after it reported quarterly profits in November and February this year. But the worry for the company about its growth prospects remains.
For the second quarter ending 30 April, HP managed to increase its net profit to $1.27bn (£756m) from $1.08bn (£640m) in the same period a year ago. But there was less good news on the sales side, as revenue fell one percent to $27.3bn (£16.2bn) from $27.6bn (£16.4bn) a year ago.
Wall Street had been expecting sales of $27.4bn (£16.3bn) for the quarter, and this marks the eleventh consecutive decline in revenues at the tech giant.
“With the first half of our fiscal year completed, I’m pleased to report that HP’s turnaround remains on track,” said Whitman in a statement. “With each passing quarter, HP is improving its systems, structures and core go-to-market capabilities. We’re gradually shaping HP into a more nimble, lower-cost, more customer- and partner-centric company that can successfully compete across a rapidly changing IT landscape.”
She later insisted that research jobs, which are vital for innovation and long-term growth for the company, would continue to grow.
HP is looking to cut back more in “areas not central to customer-facing and innovation agendas,” Whitman told Reuters in an interview. “That’s not what we’re doing here. You need to look at the R&D spending, which is up.” She also pointed to challenging conditions in markets such as China.
HP did raise its full-year earnings forecast from $3.63 (£2.15) to $3.75 a share (£2.23), compared with Wall Street’s estimate for $3.71 (£2.20).
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