Hewlett-Packard on Wednesday announced that it will lay off approximately 27,000 employees, or 8 percent of its workforce, as part of a multi-year restructuring plan that will extend to the end of 2014.
Though the announcement confirms earlier rumors of a major downsizing, HP did not specify which departments would be affected by the job cuts. Bloomberg last week cited unnamed sources as saying that the lion's share of the job cuts would happen in HP's enterprise services business unit.
The company said in a statement that the layoffs and other restructuring initiatives would generate annualized savings of $3-$3.5 billion by the end of 2014. The downsizing initiative will include an early retirement program, HP said.
HP president and Meg Whitman, speaking to analysts Wednesday during a second-quarter earnings call, called the layoffs unfortunate but "absolutely critical to the health of the company."
"These initiatives build upon our recent organizational realignment, and will further streamline our operations, improve our processes, and remove complexity from our business," Whitman said in an earlier statement. "While some of these actions are difficult because they involve the loss of jobs, they are necessary to improve execution and to fund the long term health of the company. We are setting HP on a path to extend our global leadership and deliver the greatest value to customers and shareholders."
Whitman also addressed HP's declining revenue and profits in the company's fiscal second quarter. The company's numbers slipped across the board as compared to the same period in 2011, with sales in the second quarter of 2012 dipping 3 percent to $30.7 billion, net income dropping 31 percent to $1.6 billion, and earnings per share declining 24 percent to $0.80.
HP is "cautiously optimistic" about the path forward because the trajectory of the company's continued revenue decline has flattened, Whitman said. But she added that "we wouldn't say we've turned the corner."
Whitman said HP's consumer-facing business continues to struggle, though some of that bottom-line impact has been offset by relatively stable sales of server and storage products to commercial customers that should bounce back more fully now that the recent hard disk drive shortage has passed.
HP's acquisition of enterprise search and knowledge management developer Autonomy in August 2011 appears to be yet another problem area for the struggling computing giant. Whitman said sales of new Autonomy licenses had declined in the second quarter and HP will be shaking up the executive leadership of the business unit.
"Turning HP around is going to take a lot of time and a lot of hard work, but we know what needs to be done," Whitman said at the conclusion of her earnings call comments.
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