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Summary:

Holy mackerel. More bad news for HP, it’s second quarter earnings post early and still more layoffs are on tap.

Talk about snake-bitten. Hewlett-Packard’s second quarter results leaked a half hour before the close of market Thursday, and the company said it will cut an additional 10,000 to 16,000 jobs.

That would bring total of layoffs to about 50,000 since Meg Whitman assumed the top job in September 2011. Previously announced job cuts were expected to hit 34,000; Last fall, Whitman said no additional big layoffs were planned.

On the earnings call, Whitman reiterated her contention that HP’s turnaround remains “on track” but that continued tweaks must be made. Later on the call, CFO Cathie Lesjack said HP has reached the “midpoint of the turnaround.”

“The job cuts are brutal, but a requirement,” said Patrick Moorhead, president of Moor Insights & Strategy via email. “Most of the [affected] employees are in services, an area they’ve had challenges in. There were two bright spots, one in servers as IBM’s business is declining precipitously and, surprisingly, in PCs. For HP to get back to big growth, they’ll need to win in the hybrid cloud, plain and simple.”

PC revenue rose seven percent year over year — commercial PC revenue was up 12 percent while consumer PC revenue fell two percent. In terms of units sold, total desktops sold rose 10 percent and notebook sales were up six percent. And in industry standard servers, revenue rose one percent. Just a few weeks ago, HP which had been focusing on high-end servers, announced plans to partner with Foxconn on more commoditized “scale out” servers of the sort massive cloud companies tend to buy en masse.

HP also did some more executive shuffling appointing George Kadifa, who had headed up software, is now EVP of strategic relationships and Robert Youngjohns, who was leading the Autonomy unit, now takes on software in general.

For the quarter ending April 30, HP earned 88 cents per share on revenue of $27.2 billion, which was off one percent year over year. This was the 11th consecutive quarter of revenue decline.

Whitman’s long-term turnaround calls for less reliance on low-end PCs, sales of more higher-end servers and, perhaps most important, accelerated sales of cloud and related services — which, face it, is where its rivals including IBM are also headed.

After the release posted early, HP shares slid three percent before closing one percent down at $32.15.

This story was updated throughout HP’s earnings call.

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  1. Do anyone do anything anymore?
    Leslie

  2. Wow, that’s a HUGE cut.

    1. This is how ISI Group analyst Brian Marshall summed up H-P’s report: “Same old. Cut heads. Cut revs. Cut costs. Yesterday’s tech company.” http://on.mktw.net/1oZYr30

  3. This is a huge layoff. Its half that of the last massive layoff which just finished last year I think… So really its a continuation of the layoffs before, meaning they underestimated and have had to come back and increase the total layoffs by another 25%. I guess most of it will be in their services division.

    HP’s services business is really puzzling to me. They have a huge services business and are in fact one of the biggest. Yet, somehow they do so much worse financially than their competitors. I just don’t get it. Services is a people business… Can’t they adjust it by now to be competitive? Its been several years already into the turn around.

  4. No really – that makes total sense – so, one week they announce they will invest US$1 billion in new cloud solutions and the next they say they must cut more in services. It’s the way the world’s headed. Automation will rule the enterprise. Learn how to code!

    https://gigaom.com/2014/05/06/hp-comes-up-with-an-openstack-distribution-of-its-own-and-adds-indemnification/

  5. 16K layoffs in US were most of the knowledge is, than add 16K in India, where the labor is relatively cheap, and unexperienced.

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