H-P to Layoff 14,500 in Major Restructuring

Hewlett-Packard Co. said Tuesday it will cut 14,500 jobs, or about 10% of its full-time staff, in a restructuring plan aimed at saving US$1.9 billion a year.

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.