HP's initial projection of 15,000 layoffs as a result of its merger with Compaq always seemed too low, says Rob Enderle, a research fellow with Giga Information Group. "We're not convinced it's over," he says of the job cutting.
Aside from the number of layoffs, Enderle says the way in which HP has handled the job reductions is troubling. HP, which in the past has been known as very loyal employer, has created a distracting environment for its employees. "It's better to overannounce layoffs and pull back," he says. That way, he adds, it looks like management is fighting to keep jobs rather than continuing to whittle down its workforce as the pressure to meet financial expectations increases.
Word of the layoffs comes one day after HP and Microsoft disclosed a joint $50 million investment in Microsoft's .Net software. Under the deal, more than 5,000 HP salespeople will be trained on .Net and 3,000 HP Services professionals will be certified on .Net. HP will also create a new group of .Net developers.
Earlier this month, HP reported a net loss of $2 billion for its first quarter of combined operations with Compaq, as the company absorbed $3 billion in layoff and merger expenses. At the time, HP executives promised better performance for the current quarter as the new HP cut costs from its money-losing PC and server businesses.