HEWLETT-PACKARD (HP) said it aims to boost margins by cutting jobs and reallocating spending to more profitable technology services, shrinking its workforce by a net 3,000 jobs, or one per cent, over three years.
The move, which will result in a $1bn charge, comes as rivals like IBM and Cisco Systems vie for supremacy in the lucrative business of fitting out corporate data centres that handle communications and store huge amounts of information.
HP bought technology services company EDS in 2008 for nearly $14bn to expand in the services business, and it said yesterday’s announcement was a further attempt to bolster its enterprise business.
“Over the past 20 months, we focused on integrating EDS and improving profitability,” said Tom Iannotti, senior vice president and general manager of HP’s Enterprise Services. “Now that the integration is largely complete, we have identified significant opportunities to grow and scale the business.”
HP plans to cut 9,000 jobs over three years as it shuts down older data centres. But it will also add 6,000 new positions over the same period as it invests in more advanced data centres and expands its global operations. HP said severance and asset impairment charges will result in a $1bn restructuring charge over three years, with half of that to be recorded in the third quarter. On a net basis, the company sees savings of $500m to $700m annually by the end of its 2013 fiscal year. HP currently has about 304,000 employees worldwide and is the world’s largest technology company by sales.
City A.M. Reporter