HP Prepares To Announce Mass Layoffs

Meg Whitman layoffs HPBy David Goldman and Michal Lev-Ram


NEW YORK -- Hewlett-Packard will announce another round of substantial job cuts Wednesday afternoon in an effort to streamline its teetering PC and services businesses, a source familiar with the plans told Fortune.

The layoffs will be "in the ballpark" of 25,000 workers, the source said, which would amount to about 7 percent of HP's global workforce. The nation's largest technology company by revenue currently employs 349,600 people worldwide, according to its latest regulatory filing. CEO Meg Whitman is trying to reorganize the tech giant into a leaner, more efficient powerhouse, but she faces a massively uphill battle.

The overall PC industry is stuck in neutral, but HP, the world's largest computer maker, is traveling in reverse at high speed. The company's PC sales fell 15 percent during the holiday season, with consumer computer sales tumbling 25 percent.

Meanwhile, HP's services business is sputtering, and its once-golden printing business has stagnated over the past decade. The printing business slumped especially hard in the last few years: profit in that division fell 10% last year as sales remained flat.

Many of the job cuts are expected to come from the printing unit. The company in March merged it into its "personal systems" division, which includes PCs.

HP had considered spinning off its PC unit last year, but the board later decided that it would hang on to the business-critical but low-margin division.

That may ultimately have been the right decision, but HP has deep problems in the market. It missed the boat on tablets and failed to produce a viable smartphone. As the world goes mobile and leaves PCs behind, HP is struggling to stay relevant.

It's not alone. Dell, which faces similar struggles, reported Tuesday that the company's lackluster PC sales dragged on its overall profit and revenue last quarter. Its stock fell more than 12 percent in after-hours trading.

Whitman can trim some of HP's fat, realign the organization and make other iterative improvements, but there's not much she can do to significantly alter the company's prospects without making some drastic -- and painful -- changes.

HP's past attempts to cut its way to better health haven't worked.

Then-CEO Mark Hurd axed 9,000 positions in June 2010. HP shed another 275 workers in February after the company discontinued the webOS lineup that it purchased from Palm.
Still, HP has continued to spiraling downwards. Wall Street analysts surveyed by Thomson Reuters are forecasting that HP's sales fell 5 percent last quarter, and they expect its profit to be down 26 percent.

That trend, of movement in the wrong direction, is expected to continue throughout the rest of 2012.


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12 Comments

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Claud

Serves them right...........They killed a good bit of Houston's economy!......................

They need to sell the pc business.....

May 23 2012 at 12:55 PM Report abuse rate up rate down Reply
HELLO SHERRI

The name of the game... Cut the US Jobs, send them overseas. Higher profit, less cost.
Sorry, but this is a republican ideal, not a democratic theory.
Complainers, stop complaining and try reading the facts about some of the job cuts and who is doing them.

May 23 2012 at 12:32 PM Report abuse rate up rate down Reply
pbgardenpet

I thought the economy was good.

May 23 2012 at 12:13 PM Report abuse rate up rate down Reply
mmcki43802

I would like to see the breakdown by country that these job losses will be effecting. Understand that HP moved production overseas years ago and the job losses already occured to the US when they went offshore to "better compete with lower labor costs". If you do not like the way things are going than why not do something about it instead of blaming and whining. Become an activist or join those who are already trying to make things better in spite of the politicians.

May 23 2012 at 12:01 PM Report abuse rate up rate down Reply
James Bridges

But The Government still swears that everything in this country is going just fine yet companies keep laying off people ;left and right and the Cost of Living goes up everyday.But Since the Politicians in DC live in a Fantasy world of thier own creation where everything is Milk and honey. Sorry but the country is getting worse by the day

May 23 2012 at 11:38 AM Report abuse +2 rate up rate down Reply
tmlbtb

One more company being managed out of business. Of course reward the management with golden parachutes. HP was raping the American public with their grossly overpriced ink cartridges and now it's coming back to haunt them. So the American worker gets screwed again. Thank you HP, may I have another?

May 23 2012 at 11:23 AM Report abuse rate up rate down Reply
grayfox994

Oh my! You mean it's not Romney laying off all these folks? I thought, according to the Democrats, that Romney was the only CEO to lay off folks in order to help a company survive? Seems they are wrong! Again!

May 23 2012 at 11:18 AM Report abuse rate up rate down Reply
1 reply to grayfox994's comment
HELLO SHERRI

You can pull up an article from earlier this week in which Mitt praised Whitman, stating we need people like her in 'Congress. fortunately
California choose not to elect her as governor.

May 23 2012 at 12:29 PM Report abuse rate up rate down Reply
Rod

Boy that Obama's really got the economy running great. 4 more years and everyone will be on Unemployment, food stamps and who know what. What the Obama minions don't understand is that the total wealth of the 1% they are after isn't enought to pay for 1 year of deficit spending. Obama minions have been deluded into thing that the Deficit can ever be paid by only the rich. For any real money the middle class must be tax a lot more.

May 23 2012 at 10:50 AM Report abuse +1 rate up rate down Reply
1 reply to Rod's comment
Jose

You're an idiot Rod. Explain to me why Obama is to blame for HP's lack of vision and stability. As an HP employee I've seen this coming. We were late to the game in tablets, smart phones and cloud technology. I thought the 3 CEO's in 3 years would've caused those problems but you're right it was President Obama.

May 23 2012 at 12:15 PM Report abuse rate up rate down Reply
2 replies to Jose's comment
HELLO SHERRI

You are so right on Rod. An article a few days ago noted the job cuts are in the USA. HP has nothing to do with
Whitmans (REPUBLICAN) cuts.

May 23 2012 at 12:26 PM Report abuse +1 rate up rate down
HELLO SHERRI

Mistake in my blog to you. Obama and policy has nothing to do with private industry cuts such as CEO Whitmans.

I see San Jose as the next ghost town.

May 23 2012 at 12:35 PM Report abuse rate up rate down

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