RealTime IT News

HP to Slash 14,500 Jobs

UPDATED: HP plans to cut almost 10 percent of its global workforce in a move it said was designed to save $1.9 billion.

The company plans to initiate the 14,500 layoffs over the next six quarters in addition to modifying its U.S. retirement plan. The job cuts and restructuring are expected to result in $1.6 billion in labor costs and $300 million in benefit savings.

"After a thorough review of our business, we have formulated a plan that will enable HP to begin delivering its full potential," Mark Hurd, HP CEO and president, said in a statement. "We can perform better -- for our customers and partners, our employees and our shareholders -- and we will."

The job reductions and retirement restructuring are expected to result in pre-tax charges of approximately $1.1 billion over the next six quarters, beginning in the fourth quarter of this year. HP said the $1.1 billion figure excludes a previously announced $100 million restructuring charge to be taken in the third quarter.

"The actions we are announcing today are focused on creating a simpler operating model with clearer accountability -- getting the support functions and businesses as efficient as possible without affecting key areas," Hurd said in a conference call with analysts.

According to HP, the majority of staff reductions will come in support functions, including positions in information technology, human resources and finance. The rest of the layoffs will be made inside business units.

To facilitate the reductions, HP will offer a voluntary retirement program to longer-serving staff based in the United States.

"As we take these actions, we're focused on maintaining the energy in our sales force and research and development function," Hurd said. "Headcount reductions in these areas are immaterial. We are one of the few remaining hardware companies that deliver innovation that customers value, and we'll continue to invest in compelling products that can be differentiated in the market."

The company said it will dissolve its Customer Solutions Group (CSG), a standalone organization responsible for sales to enterprise, small- and medium-size businesses and public-sector customers.

HP's CSG will merge its sales functions and related functions into three different business groups: Technology Solutions Group (TSG), Imaging and Printing Group (IPG) and Personal Systems Group (PSG).

The actions build on HP's recent moves to streamline its organization, including splitting a number of functions that had previously been combined. Last month, the company separated the role of chief marketing officer from the sales function and separated IPG from PSG.

Last week, it separated the Global Operations function from the IT organization.

According to HP, headcount-reduction plans will vary by country, based on local legal requirements and consultation with works councils and employee representatives.

The company said it is modifying its U.S. retirement programs to "better match industry benchmarks." As of next January, HP will freeze the pension and retiree medical-program benefits of current employees who do not meet defined criteria based on age and years of company service.

HP will increase its matching contribution to most employees' 401(k) plans to 6 percent from 4 percent.