HP to cut 6,000 jobs following poor Q2 results

HP to cut 6,000 jobs after posting earnings down 17% in second quarter

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By  Mark Sutton Published  May 21, 2009

HP has announced that it will cut another 6,000 jobs, following poor second quarter results.

The cuts will be in addition to the 24,000 jobs that HP is already losing following the acquisition of EDS.

On Tuesday, HP posted quarterly results showing net earnings down 17% from the same quarter last year, to $1.7 billion.

Quarterly revenue was down 3% to $27.4 billion, although this was up 3% when adjusted for the effects of currency. EMEA region revenues were down 11%, although the company refused to comment on Middle East results.

Services was the only strong performing area for the company, with revenue up 99% to $8.5 billion, primarily off the back of the August 2008 acquisition of EDS.

Mark Hurd, HP chairman and CEO commented: “Disciplined focus on operational efficiencies and execution drove record cash flow. Our services business continued to deliver strong profitability with an increased deal pipeline and the EDS integration tracking ahead of schedule.”

Hurd remained cautious about the ongoing situation, telling analysts: “You can view this as sort of ‘steady as she goes’. The quarter behaved generally as we expected.”

HP is predicting revenues in the third quarter to be either flat or to decline 2% sequentially.

John Madden, principal analyst at Ovum commented: “We think it’s a smart move for Hurd to provide this kind of tempered guidance to HP’s customers, partners and shareholders – and resist the urge to view some small signs of recovery as proof of a larger, imminent turnaround.

“We continue to be impressed with HP’s ability to cut and control costs. But until the global financial picture stabilizes, and we’re able to gauge how HP’s service delivery capabilities are ultimately affected by the ongoing headcount reductions, it will take some time to determine just how good HP’s chances really are,” he added.

3005 days ago
rajeev bajpai

couldn't agree with damian more ! HP results only reconfirm the fact that all hardware companies are sailing in the same boat. HP results only get camouflaged by the buyout of the EDS and for the last 2 quarters this is helping them to show a overall less revenue decline. its in fact a tale of two companies. The PSG business continues to be down both in revenue and unit quantities. IPG is closely related to the fortunes in the PC business and in the difficult time people tend to print less not to forget the continous proliferation of Internet is ensuring that the consumers are taking less printouts everyday. Last year HP has been able to hold on to revenue by hiking the prices of the consumables which perhaps drove more people away from the printers. The server and storage business is at an all time low for the last 3/4 years. HP continues to languish in the netbook sales and is much behind the likes of acer which is growing at a much faster clip. A company which prides itself in being close to the consumer owing to their dominance in the printer (consumer) business for decades missed the netbook opportunity by miles ! HP was also one of the the first PC companies to be on handheld/mobile bandwagon but they have not been able to do much on the subject either !! But , the good thing is that HP continues to impress analysts !!!

3006 days ago
Damian Saunders

So, that’s six thousand living, breathing, educated, tax and mortgage paying, children raising, men and woman, cast out into a world racked with recession and rapidly rising unemployment, because HP only made $1.7bn nett profit in the last twelve weeks is it? The founding fathers of HP would be turning in their graves if they could see what their company has become under Mark Hurd. Sure, I agree that there was a strong need for fiscal reform when Mark Hurd came along but I don’t see why HP had to be turned into a black hearted, ugly beast who’s own mother wouldn’t recognize it. The strong fiscal discipline has come at the cost of HP’s heart, it’s inventiveness, creativity, and energy, and it’s soul , the HP shared values, the HP way. Mediocrity + mediocrity = mediocrity Unprofitable + unprofitable = unprofitable The figures are a short term illusion created by the acquisition of EDS and the systemic exploitation of HP's people. More at http://www.damiansaunders.net

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