14 DAY TRIAL // Hewlett-Packard announced on Monday that its restructuring plans under CEO Mark Hurd include cutting around 24,600 jobs over the next three years, mainly in areas in which HP and its newly-acquired firm Electronic Data Systems overlap. The company started the discussions for the acquisition of EDS somewhere in May and concluded the deal in August for the final sum of $13.9 billion. Some potential layoffs were talked about from the beginning, as there were overlaps in the companies' services. Hurd said, “I don't see anything but goodness coming out of there... What's good for HP [is] good for the channel”.
Yesterday, HP presented its plans for transforming the EDS business group to “better align the combined company's overall structure and efficiency with the operating model that HP has successfully implemented in recent years”. The company said that about half of the positions are expected to be replaced in the following three years to create a global workforce able to address the markets and customers HP has around the world.
About 7.5% of the company's combined workforce will be laid off during the next three years, and half of the jobs are in the U.S. According to HP, around $1.8 billion annually will be saved as a result of this reduction. The company said it intends to make new investments in other areas. Also related to the restructuring program, HP announced that a $1.7 billion charge would be recorded in Q4 this year, of which $1.4 billion is said to be goodwill, while $300 million will be restructuring charges included in the financial results.
When presenting the last quarter's earnings, Hurd stressed on the fact that the company recorded a 35 percent increase in revenue since his appointment as CEO, while earnings per share went up 239 percent. According to him, HP's diverse profile made this possible as the company is able to focus on a division or another depending on market conditions.
“HP now has the broadest technology capabilities in the market to meet customer needs today and in the future,” Hurd said in a statement. “HP has a strong track record of making acquisitions and integrating them to capture leading market positions. We will deliver on the promise of HP and EDS for our customers and shareholders.”