Hewlett-Packard preparing to cull 24,600 workers

by Stevie Smith - Sep 16 2008, 12:03

Leading consumer electronics and computer manufacturer Hewlett-Packard (HP) has become something of a harbinger of unemployment doom this week after announcing it plans to cut almost 25,000 jobs over the course of the next three years.

Culminating in close to eight percent of its total workforce, HP’s decision to swing its corporate scythe in such dramatic fashion arrives in the shadow of its recent $13.9 billion USD acquisition of Texas-based Electronics Data Systems Corp.

The Associated Press reports that California-based HP’s overtly aggressive move arrives as yet another directional shift as it attempts to use the Electronics Data Systems (EDS) acquisition to mount a serious challenge against technology giant IBM Corp.

Of the 24,600 jobs scheduled to be cut between now and 2011, HP has outlined that the vast majority will be dropped from EDS, with half of the total figure likely to be slashed in the United States.

In an effort to avoid complete doom and gloom, HP has also said it hopes to resurrect around 50 percent of the lost workforce in other positions within the company at some point in the future -- although it has not specified when it expects that to happen.

While severe job cuts due to overlapping positions were forecast when HP first revealed its takeover deal with EDS back in May of this year, industry watchers have commented that a loss of almost 25,000 positions is substantially more than predicted.

In terms of resulting market progress, HP has indicated that its mass job cull and subsequent corporate restructuring will result in savings of around $1.8 billion USD per year, although it will initially be hit with a $1.7 billion USD charge in the fourth quarter in light of a fiscal goodwill adjustment and other costs relating to the execution of its restructuring process.

Addressing financial analysts earlier this week, HP’s chief financial officer, Cathie Lesjak, said that the acquisition of EDS should positively influence Hewlett-Packard’s net profit performance by the fiscal year 2010.

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