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 user 2008-09-16 at 1:00:25 pm Views: 48
  • #20727
    HP to cut 24,600 jobs as part of EDS integration
    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.

    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.

    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.