Hewlett-Packard is said to be considering eliminating 7% of its employees or roughly 25,000 workers. The PC maker needs to slash its costs to cope with the decline in sales of computers and services. The cuts might include up to 15,000 in is enterprise services sector, which sells IT services, but has been hurt of late from shrinking earnings, said an unnamed insider.
At present, HP has nearly 350,000 employees worldwide and is considering reducing that by 7%, with some leaving via incentives from early-retirement packages. Cutting up to 18,000 jobs would result in a savings for HP of over $1.2 billion. The job cuts would also add 50 cents per share to the annual earnings. HP was the original Silicon Valley garage start up over 73 years ago and could announce the slash in jobs next Wednesday when it is set to announce its second quarter fiscal earnings.
Meg Whitman has been the CEO of HP since September and is attempting to reverse a number of missteps by the company that led to Leo Apotheker’s ouster, her predecessor.
The company is facing huge competition. Its PC sector is being hit hard by competition from Apple and other computer manufacturers, while it is vying for sales in software, hardware and services with behemoths such as Oracle, Cisco and IBM.
One analyst said the possible layoffs could be tied to marketplace performance of its different business units. Last February, HP forecast its sales through quarter end, which were short of analysts’ estimates. Sales during the current year could decline as much as 4% according to predictions from analysts.
