Hewlett-Packard said today an upcoming corporate split would lead to job losses of 25,000 to 30,000, on top of tens of thousands of cuts in recent months. HP, a major player in the industry, has been undergoing a massive reorganization to cope with the move away from traditional personal computers to mobile devices.
The move by Hewlett-Packard, the world's second-largest PC maker and one of the biggest US tech firms, is the latest in the sector based on the belief that tightly focused firms perform better.
The losses will come as the US tech giant splits into two separate units: one with a focus on personal computers and printers, and the other on software and enterprise services. The new enterprise unit is seeking some USD 2 billion (1.78 billion euros) in annual cost reductions, according to the outlook provided to analysts, plus USD 700 million in savings related to the spinoff. No timetable for the layoffs was given.
In its last annual report, HP said it had some 302,000 employees at the end of 2014. Since 2012 the company been a cost-cutting drive. Since then it has limited five percent more than the goal of 55,000 jobs it set then through October of this year, CFO Cathie Lesjak said last month.
HP said yesterday the new cuts will be the last ones. "These restructuring activities will enable a more competitive, sustainable cost structure for the new Hewlett Packard Enterprise," said Meg Whitman, the HP chairman and chief executive who will head the unit after the split.
"Hewlett Packard Enterprise will be smaller and more focused than HP is today, and we will have a broad and deep portfolio of businesses that will help enterprises transition to the new style of business," said Whitman.
"As a separate company, we are better positioned than ever to meet the evolving needs of our customers around the world." The new company will focus on cloud computing, servers, storage, networking and other technology services, with the other unit HP Inc. keeping the personal computer and printer operations. Hewlett Packard Enterprise will have more than USD 50 billion in annual revenue and "will be focused on delivering unrivaled integrated technology solutions" to companies, according to a company statement.
The split, set to be completed by the end of the fiscal year in late October, will take place as a tax-free distribution of shares to HP's stockholders. It breaks up a company formed in the 1930s by Stanford University graduates Bill Hewlett and Dave Packard to make electric equipment, and whose Palo Alto garage has been dubbed "the birthplace of Silicon Valley."
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