Hewlett Packard posted its Q2 sales that have just edged out analyst expectations, and has also confirmed job cuts of 27,000 employees and says the move will save between US$3.0 and US$3.5 billion, the majority of which will be reinvested back into the company.
With HP president and CEO Meg Whitman as part of the restructuring, planning approximately 27,000 employees to exit the company, or 8.0% of its workforce as of Oct. 31, 2011, by the end of fiscal year 2014. Workforce reduction plans will vary by country, based on local legal requirements and consultation with works councils and employee representatives, as appropriate.
"These initiatives build upon our recent organizational realignment, and will further streamline our operations, improve our processes, and remove complexity from our business," said Whitman.
"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."
"We are setting HP on a path to extend our global leadership and deliver the greatest value to customers and shareholders," she said.
HP says, it will be offering an early retirement program, so the total number of employees affected will be impacted by the number of employees that participate in the early retirement plan.
"We're struggling under our own weight," said Whitman in an internal company-wide video memo explaining the future of Bill Hewlett and David Packard's company. "And we've got to restore a healthy balance in order to return HP to its position as a growing… thriving… innovating… industry leader. That's what this is all about. And the workforce reduction is only one piece of a comprehensive effort. We see a lot of opportunity to remove complexity, streamline and reduce costs in a number of areas across HP."
She acknowledges throughout that HP is in trouble, stating in the beginning, "HP's performance is still not where it needs to be" and "We have a lot of work ahead of us to get HP back on track." She also explains, a bit comically and perhaps erroneously, that "[HP] is currently rebuilding credibility one quarter at time, and to do that, we need to consistently deliver on what we say."
In addition to these restructuring actions, HP expects to achieve additional savings from non-headcount cost reductions, including supply chain optimization, SKU and platform rationalization, go-to-market strategy simplification and business process improvement.
The reinvestment plan will focus on upping R & D spending in three main areas - cloud, big data and security - as well as 'other segments that offer attractive growth potential'.
Below are HEWLETT-PACKARD's full Second Quarter 2012 Results:
And, Meg Whitman's video memo transcript: