When will it end? HP to cut up to 16K more jobs

Photo: Martin Cathrae

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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