SAN FRANCISCO • Hewlett-Packard (HP), the technology firm splitting into two entities, said it will cut as many as 33,300 more jobs as chief executive Meg Whitman tries to refashion the business for a rapidly changing technology market.
The two companies that will emerge in November - Hewlett Packard Enterprise to supply businesses with high-end technology, and HP Inc, which will sell personal computers and printers - are designed to be more nimble and specialised. HP had 302,000 workers at end-October 2014, down from a peak of about 350,000 in 2011.
"HP absolutely needs to fix enterprise services, PCs and servers across both its companies," said Bloomberg Intelligence analyst Anand Srinivasan. "Some of the issues are market-related and some of them are HP-specific. The solution to revenue growth is not going to come from restructuring actions."
HP will incur a charge of about US$2.7 billion (S$3.8 billion) as part of the restructuring, the company said on Tuesday at a meeting with analysts. It previously disclosed US$2 billion in probable cost cuts at the services division in Hewlett Packard Enterprise, and found an additional US$700 million in savings across the business, said Mr Tim Stonesifer, chief financial officer of Hewlett Packard Enterprise.
HP shares were up 0.26 per cent at US$27.11 in pre-market trading in New York yesterday. The stock fell 1.4 per cent in extended trading on Tuesday after the announcement.
As many as 25,000 to 30,000 of the job cuts will be in Hewlett Packard Enterprise. HP Inc announced 3,300 workforce reductions over three years and US$300 million in restructuring charges.
"Management reiterates that this will be the last restructuring it undertakes, but this one has been going on for several years," Mr Srinivasan said.
HP hired 172,000 people in fiscal year 2007, before acquiring computer services provider Electronic Data Systems Corp in 2008 and nearly doubling its workforce, according to data compiled by Bloomberg.
"We have an opportunity to be more successful as two companies than we would as one. We'll read the winds of change and we'll course-correct faster," said Ms Whitman, who will become president and CEO of Hewlett Packard Enterprise while serving as board chairman of HP Inc.
The reductions announced on Tuesday represent about 10 per cent to 12 per cent of the estimated 250,000 people expected to be employed by the enterprise half of the company after the split.
The company's enterprise services business has lost about US$4 billion in annual revenue since 2011. At the event, Ms Whitman likened the losses to water draining from a bathtub. "A big step forward would be if enterprise services can stop shrinking," she said.
HP has been telegraphing its shift to outsourcing for months, with Ms Whitman saying in June that "there might be a slight movement to more locations outside the US".
The company expects to generate US$3 billion in sales relating to cloud computing this year, Ms Whitman said, and sees that growing by 20 per cent year-over-year for the next three years.