The job cuts will occur over the next six quarters, the Palo Alto, Calif.-based personal-computer maker said.
"After a thorough review of our business, we have formulated a plan that will enable H-P to begin delivering its full potential," said Mark Hurd, HP chief executive officer and president. "We can perform better - for our customers and partners, our employees and our shareholders - and we will."
H-P said it expects to record pretax restructuring charges of $1.1 billion over the next six quarters, beginning in the fourth quarter of fiscal 2005. Beginning in fiscal 2007, H-P expects to save about $1.9 billion a year from the restructuring measures, composed of $1.6 billion in labor-cost savings and $300 million in benefits savings. In fiscal 2006, the company estimates it will save between $900 million and $1.05 billion.
The company said about half the savings "will be used to offset market forces or reinvested in the business to strengthen H-Pis competitiveness." The remainder is expected to flow through to operating profit, it said.
"Reductions in sales positions will be minimal, so that H-P can continue to provide world-class service and avoid impacting customers," a company statement read. "There will be little change to headcount in research and development, to ensure that the company remains a leader in technology innovation."
H-P said the majority of the job cuts will come in support functions, such as information technology, human resources and finance.