Hewlett-Packard (NYSE:HPQ) CEO Meg Whitman is wielding the corporate axe, cutting 27,000 jobs at the world’s largest computer maker in an effort to get the company back on track.
The move to trim HP’s worldwide payroll of 350,000 by about 8% was announced Wednesday evening after weeks of speculation over how many jobs would be cut.
Whitman was hired to turn around HP last year. Yesterday the company announced that its second-quarter earnings, while down from last year, beat Wall Street’s forecast.
News of the job cuts and better-than-expected results sent HP shares up more than 5% in early Thursday trading.
Plagued by declining computer sales, HP is looking to save money and restructure its business to focus on growing market segments. The company said it expects to save between $3 billion and $3.5 billion annually from the job cuts, which will be fully implemented by late 2014.
Not all of the 27,000 jobs lost will be layoffs. The company said it will extend early retirement packages to some workers. Company officials did not say from which units the cuts would come, the Associated Press noted.
As bad as the announced number of job cuts may seem, it could have been worse. Last week, rumors circulated placing the percentage of jobs cut at between 10% and 15%, which would have meant more than 35,000 jobs lost.
HP’s payroll has expanded from 86,200 in 2001, to 349,600 this year, largely through acquisitions of other companies like Compaq and EDS, the AP noted.
Despite having beat analysts’ forecast, HP remains a deeply troubled company, with declining sales and reputation in its core product segments, like printers and ink cartridges. Past attempts to restructure the company — including job cuts of 14,500 in 2005 and 24,600 in 2008 — have failed to address HP’s fundamental problems, which stem, at least in part, from too many ill-considered acquisitions.