Hewlett-Packard set to cut between 25,000 and 30,000 jobs
Hewlett-Packard, which is splitting into two listed companies later this year, said on Tuesday it expects to cut another 25,000 to 30,000 jobs in its enterprise business as the tech pioneer adjusts to falling demand.
The latest cuts, on top of 55,000 layoffs previously announced under Chief Executive Meg Whitman, notably will be in its faster-growing corporate hardware and services operations, to be spun off as Hewlett Packard Enterprise, or HPE, on Nov. 1.
The other company, HP Inc, will comprise the computer and printer businesses, which have been hit hard by a relentless decline in sales of personal computers.
“We’ve done a significant amount of work over the past few years to take costs out and simplify processes and these final actions will eliminate the need for any future corporate restructuring,” Whitman said in a statement.
The job cuts, aimed at saving $2.7 billion a year, will result in a charge of about $2.7 billion, beginning in the fourth quarter, HP said.
HP had more than 300,000 employees as of Oct. 31, 2014. Job cuts have become a way of life at the company in recent years as it has digested a series of acquisitions that failed to revive its fortunes.
Chief Financial Officer Cathie Lesjak said last month that HP expected the previously announced total of 55,000 job cuts under Whitman to increase by up to 5 percent by the end of October.
In the third quarter ended July 31, HP’s revenue from personal computer and printer businesses, its largest, fell 11.5 percent.
Of the units to be housed in HPE, which will be run by Whitman, sales in enterprise services dropped 11 percent, while revenue at the enterprise group rose 2 percent.
HPE will have revenue of more than $50 billion, and is expected to report adjusted profit of $1.85 to $1.95 per share in 2016, HP said on Tuesday.
The business is expected to report free cash flow of $2.0 billion to $2.2 billion in 2016, at least half of which is expected to be returned through dividends and share buybacks.
The stock fell 1.4 percent to $26.73 in extended trading.
Maxim Group analyst Nehal Chokshi blamed the market reaction on the cash flow target, which he said looked short of the contribution needed from the enterprise unit to meet analysts’ forecasts.
(Reporting by Abhirup Roy in Bengaluru; Writing by Christian Plumb; Editing by Savio D’Souza and Richard Chang)