HP’s CFO Cathie Lesjak says the company will cut up to an additional 5% more people from its workforce than the 55,000 people it had planned to eliminate.
This is a long-running layoff that began in 2012 with an initial target of 25,000 jobs, but grew until the target became 55,000 people.
Now it’s grown again. Lasjak didn’t give a new total number although she said the additional job cuts won’t force HP to spend more on restructuring than it had planned.
This is what Lesjak told Wall Street analysts on the quarterly conference call:
We are nearing the end of our 2012 restructuring program and 3,900 people exited in Q3. By the end of Q4, we expect to exceed our prior estimate of 55,000 people to exit the company by up to 5% but will not exceed the foretasted GAAP-only charges.
This particular layoff will be completed in October and HP expects it to cost $US5.5 billion. In June, Lesjak said HP had eliminated a total of 48,000. Doing the maths, that means HP has trimmed 51,900 people.
More layoffs likely after the split into two companies
After October, HP will be split into two companies and more layoffs could result from that, too.
Those cuts will be to “offset” the costs associated with the fact that HP will also be hiring.
The two HPs will need two HR departments, two legal departments, two IT departments, and so on. CEO Meg Whitman calls these “dis-synergies” and Whitman and Lesjak have been hinting and warning about layoffs associated with that since last quarter. So far they haven’t attached any specific numbers to their plans.
Both execs promised to reveal more details about restructuring at the Wall Street analysts meeting on September 15.
For now, what Whitman promised was that this giant layoff would be “the last restructuring for Enterprise Services.”
The beleaguered Enterprise Services unit (HP ES), which does outsourcing and consulting, has been a big target of the current layoff and has been downsizing nearly continuously since 2008, when HP bought EDS and doubled its headcount.
HP ES has also been one of Whitman’s big problem children since she took office, with revenue shrinking by double digits quarter after quarter (measured from the previous year’s quarter) — and declined 11% in the most recent quarter from a year ago, the company announced today.
She’s called out the troubles with ES repeatedly as one big reason for HP’s overall continuous drop in top-line revenue.
She says she’s setting ES to run at 7% to 9% profit once these cuts are done. In Q3, it earned $US297 million on revenues just shy of $US5 billion, or a 6% operating margin.
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