Hewlett-Packard Co (HP) is considering axing as many as 25,000 jobs — or 8 percent of its workforce — to reduce costs and help the company contend with ebbing demand for computers and services, sources briefed on the plans said.
The number to be cut includes 10,000 to 15,000 from HP’s enterprise services group, which sells a range of information--technology services and has been beset by declining profitability, said the sources who asked not to be identified because the plans are not final and may change.
Meg Whitman, chief -executive officer since September last year, is seeking to reverse the growth slump that led to the ousting of her predecessor, Leo Apotheker. The company’s PC sales are dropping as consumers move in favor of tablets, such as Apple Inc’s iPad, and the firm has been slow to adapt to the shift toward cloud computing, away from the IT services which HP provides.
“Hewlett-Packard could make the difficult decision of announcing a workforce reduction,” Brian Marshall, an analyst at ISI Group, wrote in a research note earlier this month. This “would enable investments in strategic, higher-growth areas,” he said.
Eliminating 18,000 jobs could result in savings of about US$1.2 billion and add US$ 0.5 to annual per-share earnings, he said.
Michael Thacker, a spokesman for California-based HP, declined to comment.
Shares in the firm rose to as high as US$22.27 after Bloomberg reported the changes and gained US$0.03 to US$22.06 at the close in New York. The stock has so far dropped 14 percent this year.
Some of the cuts to the global operator’s workforce of 324,600 may come through early retirement packages, the sources said, and added that it may offer early retirement to several thousand people.
The overall reduction and additional cost savings throughout the company could result in savings that reach billions of dollars, one person said.
HP, the world’s largest maker of PCs and printers, is working with management consulting firm McKinsey & Co to draw up the job cuts plan.
Whitman, former chief executive officer of EBay Inc, said in March that she would combine the PC and printing divisions, ending deliberations to spin off the PC unit. She has also said she would step up investment in research and development and take steps to shore up HP’s balance sheet.
Besides tussling with Apple, HP is also vying with companies including IBM Corp, Oracle Corp and Cisco Systems Inc in the market for hardware, software and services for large corporations.