Hewlett-Packard is reportedly mulling a severe downsizing effort that would result in an 8 percent reduction of its workforce, or about 25,000 pink slips handed out amongst the nearly 325,000 people the computing giant employs globally.
The lion's share of the job cuts would happen in HP's enterprise services business unit, according to Bloomberg, which reported the possible downsizing on Thursday, citing unnamed sources. Some 10,000 to 15,000 jobs could be cut in the enterprise IT services division HP has built up since it acquired Electronic Data Systems (EDS) in 2008 for $13.9 billion to better compete with companies like IBM and Accenture.
HP's enterprise services business has "been beset by declining profitability" in recent quarters, Bloomberg noted, leading to the downsizing plan—which isn't currently set in stone, the agency's sources said.
Multiple factors are at play in HP's thinking, according to Bloomberg. Chief executive Meg Whitman and her team have witnessed the explosive growth in popularity for tablets like Apple's iPad exert pressure on HP's PC business, but the movement to cloud computing is also putting strain on the company's dedicated, siloed approach to IT services. Wall Street consensus is that HP's 2012 revenue could fall as much as 4 percent from its numbers in 2011, which was already a difficult, transitional year for the company.
"Eliminating 18,000 jobs could result in savings of about $1.2 billion and add 50 cents to annual per-share earnings," one financial analyst told Bloomberg.
HP attempted to enter the consumer tablet space last year with its webOS-based TouchPad, but promptly exited that market in embarrassing fashion under the leadership of then-CEO Leo Apotheker just weeks after launch. The company has since open-sourced webOS, which it acquired in its $1.2 billion deal for Palm in 2010, and purged a number of jobs from its webOS unit.
The company is reportedly preparing to take another shot at consumer tablets with devices based around Microsoft's forthcoming Windows 8 operating system.
Apotheker's predecessor, Mark Hurd, brokered the deals for EDS and Palm before being ousted from the company in the aftermath of an expense report scandal involving a marketing contractor who has alleged that Hurd acted inappropriately towards her on business junkets.
The rumored restructuring plan could be announced as early as May 23, when HP is scheduled to report its fiscal second-quarter earnings.
HP declined to comment on the Bloomberg report.
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