HP TO CUT 24,600 JOBS WORLDWIDE

[Anonymous]

http://news.yahoo.com/s/ap/20080915/ap_on_hi_te/hp_eds_restructuring&printer=1;_ylt=AlJSruy2V.aKDjY8Cloy7NRk24cA
HP to cut 24,600 jobs as part of EDS integration
Hewlett-Packard
Co. said Monday it plans to slash 24,600 jobs over the next three
years, nearly 8 percent of its work force, as it combines operations
with Electronic Data Systems Corp., the technology-services company it
recently acquired.The cuts represent the Palo Alto-based company’s most
aggressive move yet to streamline its operations under Chief Executive
Mark Hurd, who engineered the $13.9 billion acquisition to challenge
IBM Corp. for more of the lucrative, long-term business of helping
companies manage their computing infrastructure.Most of the cuts will
come from within EDS’s ranks, and nearly half will be jobs in the U.S.,
HP announced Monday after the stock market closed. HP said it plans to
eventually add about half the positions back as different jobs in
different departments within the company.

Some of the areas
expected to get hit include the finance, human resources and legal
departments, areas where there are traditionally overlapping duties
within combined companies.HP had not previously detailed how many
employees of the combined company would lose their jobs. Before the
acquisition, HP had 178,000 people and EDS had 142,000, a total of
320,000.HP expects to save $1.8 billion per year from the cuts once the
restructuring is complete. The company will incur a $1.7 billion charge
in the current three-month period, its fiscal fourth quarter, for a
goodwill adjustment and other costs connected to the restructuring.As
huge as the reductions are, they’re not the biggest in tech history.

In
the early 1990s, Armonk, N.Y.-based IBM shed more than 150,000 workers
over a five-year stretch as it racked up nearly $16 billion in losses
and faced questions about its survival.With the addition of EDS, HP
hopes to challenge IBM’s core services business in a bigger way.HP and
EDS had a combined $38.8 billion in services revenue last year. The
combined sales eclipsed HP’s revenues from its personal-computer
division, HP’s biggest business unit for that period. HP is the world’s
No. 1 seller of PCs worldwide.

IBM had $51.4 billion in total
technology and business-services revenue in 2007.Competition for
services contracts is intensifying as businesses look for ways to
offload some of their information-technology chores. Rising energy
prices and demand for more computing power has made deploying new
technology more costly and complicated, a combination that makes
outsourcing those duties increasingly attractive for companies looking
to cut costs.The turmoil on Wall Street has actually increased demand
for those services in some sectors because it’s often viewed as an
investment that can help companies save money over the long term.

One
of the biggest challenges facing Hurd has been finding new ways to
improve sales at a company that last year cracked $100 billion in
revenue for the first time while keeping Wall Street happy with
improving profit margins.Hurd has been aggressive about cutting costs
since he was hired in 2005. His first big act was a major restructuring
that eliminated nearly 15,000 jobs.

Hurd’s changes have helped
HP wring more profits from its businesses even as the personal-computer
industry as a whole grapples with shrinking profit margins, and HP’s
crown-jewel business — printer ink — faces intensifying competition
from lower-cost competitors.HP shares fell $1.64, or 3.5 percent, to
$45.33 in regular-session trading. In after-hours trading, the stock
gained 37 cents to $45.70.

[Author]

September 16, 2008 at 1:00 PM