HP may cut up to 16,000 more jobs as results disappoint

SAN FRANCISCO Thu May 22, 2014 6:36pm EDT

A view of the Hewlett Packard headquarters in Palo Alto, California November 23, 2009. REUTERS/Robert Galbraith

A view of the Hewlett Packard headquarters in Palo Alto, California November 23, 2009.

Credit: Reuters/Robert Galbraith

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SAN FRANCISCO (Reuters) - Hewlett-Packard Co plans to cut as many as 16,000 more jobs in a major ramp-up of CEO Meg Whitman's years-long effort to turn around the personal computer maker and relieve pressure on its profit margins.

On Thursday, the company posted a disappointing 1 percent drop in quarterly revenue, as it struggled to maintain its grip on the shrinking personal computer market while protecting profit margins. That marked its 11th consecutive quarterly sales decline.

Shares in HP closed down 2.3 percent at $31.78, after the company inadvertently posted the results on its website more than half an hour before the closing bell.

HP, whose sprawling global operations have more than 250,000 employees, had originally planned to shed 34,000 jobs as part of its corporate overhaul. On Thursday, it estimated 11,000 to 16,000 more positions needed to go, scattered across different countries and business areas.

Whitman said HP continues to find areas to streamline across the company's broad portfolio, which encompasses computing, networking, storage and software. But research jobs, which are vital for innovation and long-term growth, will continue to grow.

HP is looking to cut back more in "areas not central to customer-facing and innovation agendas," she said in an interview, rather than areas like research. "That's not what we're doing here. You need to look at the R&D spending, which is up."

The Silicon Valley company is trying to reduce its reliance on PCs and move toward computing equipment and networking gear for enterprises, part of Whitman's effort to curtail revenue declines and return the world's No. 1 PC maker to growth.

HP recorded sales of $27.3 billion in its fiscal second quarter, ended April 30, just shy of the $27.41 billion Wall Street had expected.

Whitman said China remained a challenging region, though revenue from that country rose in the quarter. U.S. companies like International Business Machines Corp and Cisco Systems Inc have blamed recent lackluster performances on a backlash against American companies in China, in the wake of U.S. spying allegations.

On Thursday, HP forecast full-year earnings of $3.63 to $3.75 a share, compared with Wall Street's estimate for $3.71.

It reported non-GAAP diluted net earnings of 88 cents a share in the fiscal second quarter, up 1 percent from a year earlier and about level with what analysts, on average, had expected.

(Reporting by Edwin Chan; Editing by Steve Orlofsky and Richard Chang)

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Comments (5)
chuck2 wrote:
Not to amusing how if a firm does not hit some analyst’s forecasts, which often end up wrong, the management who made the “decisions” ends up staying while the workers leave. That is NOT “Capitalism” which supposedly punishes management/investors for incompetency “according to analysts forecasts” (and who measures the analysts folks and how many of them laid off when wrong??” This manner of running business/investments, applies to only short terms, needs changing as is part of economic disasters destroying nation

May 22, 2014 4:44pm EDT  --  Report as abuse
chuck2 wrote:
Not to amusing how if a firm does not hit some analyst’s forecasts, which often end up wrong, the management who made the “decisions” ends up staying while the workers leave. That is NOT “Capitalism” which supposedly punishes management/investors for incompetency “according to analysts forecasts” (and who measures the analysts folks and how many of them laid off when wrong??” This manner of running business/investments, applies to only short terms, needs changing as is part of economic disasters destroying nation

May 22, 2014 4:44pm EDT  --  Report as abuse
SLOjohnny wrote:
CEO was paid $54,000,000 to work to years. He cut workers pay and received a huge bonus. He billed the company for the costs of entertaining his girl friend and was allowed to resign. Meg Whitman will devastate the lives of 50,000 employees and their families while she stuffs tens of millions of dollars in her pocket. These large corporations are destroying the US. Who are you going to sell your junk to?

May 22, 2014 5:23pm EDT  --  Report as abuse
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