HP has laid off 41,000 people (with about 9,000 people left to go) under its current downsizing plan for 2014.
On Tuesday, the company hinted that more layoffs could be coming with its plans to separate itself into two huge companies.
During its quarterly conference call, Wall Street analysts asked for details about HP’s plans to divide itself into two companies: HP Inc., which will be the PC and printer unit, and HP Enterprise, which will be all the other businesses like servers, networking gear, software, outsourcing, cloud computing and so on.
Maynard Um of Wells Fargo delicately asked CEO Meg Whitman if these plans will involve any “incremental synergies” which is code for more layoffs, though it also implies getting rid of other things like equipment, real estate.
Whitman didn’t answer the question directly but hinted that this was likely.
“This separation was totally the right thing to do for this company,” she said. “It gives us a chance to clean-sheet two, new Fortune 50 companies. It’s remarkable how it focuses the mind around overhead. Do we need exactly what we have today? What we are not doing is separating the company into two pieces exactly as we have today. Knowing what we know now, if you have a chance to restart this Fortune 50 companies, how would you organise? That has been a really interesting and I think, going to be really good, for both of these companies.”
Whitman asked CFO Cathie Lesjak to respond to the question, too.
She said, more bluntly, “I don’t have a specific number for you. We’re still working through this. We’re working through, frankly, also the costs of the separation, which we will give an update on in our earnings call in Q1.”
But she added, “This is an opportunity to do zero-based budgeting, as close as you can get to zero-based budgeting for two Fortune 50 companies. Because every line item needs to be reviewed. Every balance sheet item needs to be reviewed, in order to do this split. So its a huge opportunity for us to really take a different perspective with our cost structure.”
Many HP employees probably won’t be surprised if HP does trim its workforce some more when it splits.
They have been going through layoffs since 2008. The latest round, which began in 2012 as a plan to trim 27,000 employees, was expanded to 29,000, then to 34,000, and then, in May, to 45,000 to 50,000.
And HP is still enormous. Over 275,000 people work there.
Again, Lesjak said that out of the 50,000 employees it was cutting in the current layoff, 41,000 are now gone.
The layoff cost HP $US1.6 billion in its fiscal 2014, and it expects to save $US3.5 billion dollars when the layoffs are complete, applying some of that savings to R&D and product development hoping to get HP to grow revenues again.