HP expands job cuts by 2,000 to 29,000

SAN FRANCISCO -- BeleagueredHewlett-Packard isn't through slashing its workforce. The tech giantplans to cut 2,000 more jobs on top of the 27,000 it announced a fewmonths ago.

The venerable Silicon Valley company says it now plans to cut 29,000 jobs by October 2014, according to a regulatory filing.

In May, HP said it would slash 27,000 jobs, or 8% of its worldwide workforce, in hopes of saving billions and reversing a financial funk amid brutal competition.

The additional cuts come a month after HP suffered the biggest loss in its 73-year history.

HPhad no comment. But more people than expected have opted for earlyretirement from the company, easing layoffs of younger workers,according to a person familiar with HP's plans, who declined to speak onthe record because he is not authorized to do so.

News of the latest cutbacks sent HP shares up 14 cents to close at $17.43.

Themultiyear restructuring plan is "absolutely critical for the long-termsuccess of the company," CEO Meg Whitman said in a conference call inMay. Last month, she said HP is in the "early stages of a turnaround."

HPis eviscerating thousands of jobs because its revenue and profits arefading. The Palo Alto, Calif., company reported a loss, factoring inaccounting charges, of $8.9 billion for its fiscal third quarter, whichended July 31, compared with a profit of $1.9 billion in the samequarter a year earlier. Revenue was $29.7 billion, down 5% from the sameperiod a year ago.

The company's revenue isbeing squeezed by a phalanx of competition from Dell, Apple, IBM andothers on multiple product fronts. The projected slackening demand forPCs this summer won't help matters, nor will HP's lack of a tabletstrategy.

The steady beat of bad news not onlythreatens to further deflate worker morale but could greatly compromiseHP's recruitment efforts, analysts say.

"Howmany more" of these layoffs are HP employees "going to be subject to?"says Jonathan Yarmis, an analyst at HfS Research. "When does it stop? Wedon't know where the bottom is and, we fear, neither does HP."

Themassive workforce reduction is believed to be the third-largest in techhistory. IBM slashed 60,000 jobs in mid-1993, and AT&T laid off40,000 in early 1996, according to analyst Phil Fersht of HfS Research.


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