HP to Slash 14,500 Jobs

The company hopes to save almost $2B with job reductions and a modified U.S. retirement plan.
Posted July 19, 2005
By

Roy Mark


HP plans to cut almost 10 percent of its global workforce in a move it said was designed to save $1.9 billion.

The company plans to initiate the 14,500 layoffs over the next six quarters in addition to modifying its U.S. retirement plan. The job cuts and restructuring are expected to result in $1.6 billion in labor costs and $300 million in benefit savings.

''After a thorough review of our business, we have formulated a plan that will enable HP to begin delivering its full potential,'' Mark Hurd, HP CEO and president, said in a statement. ''We can perform better -- for our customers and partners, our employees and our shareholders -- and we will.''

The job reductions and retirement restructuring are expected to result in pre-tax charges of approximately $1.1 billion over the next six quarters, beginning in the fourth quarter of this year. HP said the $1.1 billion figure excludes a previously announced $100 million restructuring charge to be taken in the third quarter.

''The actions we are announcing today are focused on creating a simpler operating model with clearer accountability -- getting the support functions and businesses as efficient as possible without affecting key areas,'' Hurd said in a conference call with analysts.

According to HP, the majority of staff reductions will come in support functions, including positions in information technology, human resources and finance. The rest of the layoffs will be made inside business units.

To facilitate the reductions, HP will offer a voluntary retirement program to longer-serving staff based in the United States.

''As we take these actions, we're focused on maintaining the energy in our sales force and research and development function,'' Hurd said. ''Headcount reductions in these areas are immaterial. We are one of the few remaining hardware companies that deliver innovation that customers value, and we'll continue to invest in compelling products that can be differentiated in the market.''

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