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VOL. 36 | NO. 36 | Friday, September 07, 2012
HP's cost-cutting drive to dump 2,000 more workers
SAN FRANCISCO (AP) — Hewlett-Packard Co. is planning to cut about 2,000 more jobs than it had previously announced as CEO Meg Whitman tries to turn the company around.
In a regulatory filing Monday, the computer and printer maker said it will eliminate 29,000 jobs by October 2014, up from the 27,000 cuts it announced in May when HP employed about 350,000 people.
The company, which is based in Palo Alto, Calif., didn't explain why it had raised the number. The revision comes amid signs that the already slumping personal computer market may weaken even further as an increasing number of sleek smartphones and tablet computers win over consumers.
The shift to mobile devices has hurt HP, the world's largest maker of PCs. HP is preparing to release a new line of tablets this fall and has been trying to diversify into more profitable lines of technology, such as business software and consulting, but Whitman has cautioned it will take several years for the company to bounce back from a litany of problems, including a lack of innovation and acquisitions that haven't panned out.
For instance, the diminished value of HP's 2008 acquisition of consulting service Electronic Data Systems saddled the company with an $8.9 billion loss in its most recent quarter.
About 8,500 workers already have accepted early retirement offers. Most of those employees left HP Aug. 31, according to Monday's filing. The rest of the early retirees will depart by the end of August 2013.
ISI Group analyst Brian Marshall estimated that HP will save an additional $200 million annually by cutting an extra 2,000 jobs. In May, the company had estimated its austerity drive would reduce its annual expenses by $3 billion to $3.5 billion.
The company expects to record charges totaling $3.7 billion to cover the costs of paying departing workers and other cost-cutting measures. That's up from the May estimate of $3.5 billion. HP absorbed $1.7 billion of the projected charges in its last fiscal quarter ending in July.
The company's stock price rose 24 cents, or 1.4 percent, to $17.53 in late afternoon trading. The shares are still close to their eight-year low of $16.77, hit Aug. 30.