Hewlett-Packard(s hpq) which has been slimming down to fighting weight is cutting more jobs than it had expected. In fact, it expects to cut 5,000 more of those jobs, bringing the total headcount cut for its reorganization to 34,000 by October 31, 2014, according to 10k paperwork filed with the Securities & Exchange Commission on December 30.
The cutting of jobs, many expected to come through attrition, was part of a reorg announced in May 2012 to be completed by the end of HP’s fiscal year 2014. Three months later, HP said it expected to ax 29,000 jobs. According to the 10K filing, that was not enough:
Due to continued market and business pressures, as of October 31, 2013, HP expects to eliminate an additional 15% of those 29,000 positions, or a total of approximately 34,000 positions, and to record an additional 15% of that $3.6 billion in total costs, or approximately $4.1 billion in aggregate charges. HP expects to record these charges through the end of HP’s 2014 fiscal year as the accounting recognition
To be clear, HP has said that the total number of cuts could vary plus or minus 15 percent and in October warned that it might be in the high end of that range. This week’s disclosure that 5,000 more jobs are on the line, falls within that guidance.
At the end of its last fiscal year, HP employed just over 317,500 people worldwide but CEO Meg Whitman, who took the reins of the tech giant in September 2011 after several tumultuous years, has repeatedly cautioned that the company is in the midst of a long-term turnaround.
As most tech analysts have shown, HP is trying to remake itself as a cloud and cloud service provider. The problem is while it’s doing that, it still relies on revenue from PCs and servers, two sectors under intense pressure. HP has also repeatedly stumbled in mobile, buying Palm Computing in 2010 for $1.2 billion, for example, then discarding Palm’s technology. Now, HP is reportedly thinking about entering the “phablet” market.
It just seems the company, despite CEO Meg Whitman’s best efforts, has very little wiggle room for more mis-steps.
In a research note written before the holidays based on the company’s fourth quarter results, Sanford Bernstein Senior Analyst Toni Sacconaghi said HP continued to “struggle with improving its margins and share together, despite substantial cost cuts — particularly in its enterprise business.”
He worried about what he called “profitless prosperity.”
News of more job cuts shows that Whitman is acutely aware of the company’s need to boost profitability. The risk is that more cuts could further sap the company’s technical expertise.