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.

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