HP confirms 27,000 job cuts

HP is to axe around 8% of its global workforce as it looks to stem any further profit drop by “simplifying” the business.

HP

The world’s largest PC maker says the job cuts will save about $3bn (£1.9bn) a year, which it will reinvest in growth areas such as cloud computing, big data and security. It will also invest in marketing, research and development and other unspecified tools that “simplify” the customer experience.

HP has struggled with a decline in hardware sales in recent years as consumers opt for smartphones and tablets over desktop and laptop computers.

The company employs around 20,000 people in the UK, including consumer and business marketing teams, but it is not yet clear how specific divisions will be affected. A spokeswoman has said, however, that the workforce reduction will impact “just about every” business and region.

The company has confirmed that Mike Lynch, the head of Autonomy, the UK company acquired for $10bn (£6.4bn) last year as HP looks to focus on cloud computing and data, will be leaving as part of the changes. He will be replaced by Bill Veghte, HP’s chief strategy officer.

HP says the market and “competitive positioning” for Autonomy remains strong, particularly its cloud offerings.

Meg Whitman, HP’s chief executive who joined from eBay to turn the company around in September, says the staff reductions will set the company on a path to extend its “global leadership” and deliver the “greatest value” to customers and shareholders.

“While some of these actions are difficult because they involve the loss of jobs, they are necessary to improve execution and to fund the long term health of the company,” she says.

The announcement comes as HP reported a 31% profit decline in its second quarter to $1.6bn (£1bn). Revenue dropped 3% to $30.7bn (£19.6bn).

HP is expected to take a pre-tax charge of $1.7bn (£1.1bn) in 2012 due to the restructure.

Separately, Whitman confirmed HP will also be launching a Windows 8 tablet by the end of the year, its second attempt at entering the tablet market. Its previous tablet, the TouchPad was canned after disappointing sales, despite being supported by a multi million pound global marketing campaign.

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