PC giant to lay off thousands as growth stalls in PCs.
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The massive 27,000 jobs cut – which accounts for around 8% of HP’s total workforce – are “absolutely critical to the long-term health of the company,” Meg Whitman CEO said in a conference call yesterday.
HP, who announced a net profit fall of 30% for the second fiscal quarter ending April 30, amid declines in two out of five of its business divisions including Printing and Enterprise division, while its PC business showed 0% growth.
The struggling PC giant’s net revenue also slumped 3% to $30.7 billion, compared to last year.
However, the results were ahead of analyst forecasts.
The world’s biggest PC maker showed disappointing 0% growth in its PC business – called “Personal Systems Group” – despite the release of a slew of new PCs and Laptops, as it continues to suffer in the face of intense competition from mobile tabs like the iPad and a slew of Androids hitting the market.
The multi-year restructuring will help “fuel innovation and enable investment” the company said in a statement.
Last week, it was tipped the PC giant, who employs around 350,000 globally, would slash 30,000 jobs with the announced number being slightly less.
Whitman said the cutbacks to be completed by October 2014 would mean savings of $3.5m for the company annually.
Many of the cuts will be from its struggling enterprise services group and will help Palo Alto focus on new product R&D and increase its competitive edge.
“While some of these actions are difficult because they involve the loss of jobs, they are necessary to improve execution and to fund the long term health of the company,” Whitman said yesterday, reports Reuters.
But HP’s boss is also making changes at the top – removing Mike Lynch, founder of Autonomy, the UK software company it purchased last year for $11 bn, and replacing him with HP chief strategy officer Bill Veghte.
Net revenue for HP’s PSG division was $9.4bn showing flat growth, while its Imaging and Printing Group saw a 10% dip in revenues to $6.1bn.
Notebooks were down 3% although desktop PCs were up 5% by revenue compared to 2011.
HP’s Enterprise Servers division also saw its fortunes fall by 6%.
However, its Software division rose 22% – one of the only divisions that witnessed growth in Q2 along with Financial Services.
The Palo Alto giant’s revenue for Asia Pacific fell 20% as did EMEA region down 35%, although the US’ market growth was stable, with Canada and Latin America witnessing 10% growth.