HP Planning 30,000 Job Cuts In Restructuring Move

HP is looking to cut even more of its workforce in conjunction with a Nov. 1 corporate split intended to make the company more agile and efficient.
Cloud Computing: 8 Hidden Costs
Cloud Computing: 8 Hidden Costs
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Hewlett Packard plans to slash 25,000 to 30,000 more jobs as part of cost-cutting measures in conjunction with its plan to split into two companies. The newly announced layoffs are in addition to another 55,000 in job cuts announced a year ago when HP first revealed the plans to split.

"These restructuring activities will enable a more competitive, sustainable cost structure for the new Hewlett Packard Enterprise," CEO Meg Whitman said in a prepared statement Tuesday, Sept. 15. "We've done a significant amount of work over the past few years to take costs out and simplify processes and these final actions will eliminate the need for any future corporate restructuring."

HP's workforce totaled 302,000 in October 2014, down from a peak of about 350,000 in the wake of several acquisitions over the years, including Electronic Data Systems (EDS), 3Com, Palm, and Autonomy. HP has pulled the plug on some of the initiatives that came out of these deals.

For instance, HP spun off Palm's webOS to the open source community. HP has also attracted broad criticism for other acquisitions, including shareholder lawsuits alleging HP paid too high a premium in the $11.7 billion Autonomy deal architected by Whitman's predecessor Leo Apotheker.

HP will split into two companies on Nov. 1.

Hewlett Packard Enterprise will become the enterprise infrastructure company that includes cloud computing, software, and services. The PC and printer business become part of a second company called HP Inc., which is only targeting about 3,300 job cuts going forward.

HP Enterprise executives told analysts they expect annual revenues of $50 billion.

"Hewlett Packard Enterprise will be smaller and more focused than HP is today, and we will have a broad and deep portfolio of businesses that will help enterprises transition to the new style of business," Whitman said. "As a separate company, we are better positioned than ever to meet the evolving needs of our customers around the world."

[Read about recent shakeups at Lenovo and HTC.]

The split is intended to make the company more effective, efficient, and agile in each of the markets it serves, qualities that had become more difficult for the tech giant to achieve in recent years.

HP said the job cuts and corporate split will deliver $2.7 billion in ongoing annual cost reductions to HP Enterprise. The company will take a $2.7 billion charge in association with the cuts starting in the fourth quarter of 2015.

The result will be a smaller and more profitable operation going forward.

With that in mind, HP Enterprise plans to target higher margin businesses such as data analytics and security and put less of a focus on outsourced services such as those that were offered through its EDS acquisition.

Whitman told analysts Tuesday that the company was targeting $3 billion in cloud revenue for fiscal 2016 and is targeting 20% year-over-year growth for the next several years.

In April, HP reportedly said it would abandon the public cloud business due to stiff competition from rivals such as Amazon Web Services, Google, and Microsoft. HP clarified those statements a few days later, saying HP Helion and hybrid cloud remain key components of its strategy going forward.

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