HP may cut up to 16,000 more jobs as results disappoint

SAN FRANCISCO Fri May 23, 2014 2:52am IST

1 of 2. A visitor takes a photo with a tablet in front of a Hewlett-Packard (HP) stand at the Mobile World Congress in Barcelona, February 27, 2014.

Credit: Reuters/Albert Gea/Files

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SAN FRANCISCO (Reuters) - Hewlett-Packard Co (HPQ.N) plans to cut as many as 16,000 more jobs in a major ramp-up of CEO Meg Whitman's years-long effort to turn around the personal computer maker and relieve pressure on its profit margins.

On Thursday, the company posted a disappointing 1 percent drop in quarterly revenue, as it struggled to maintain its grip on the shrinking personal computer market while protecting profit margins. That marked its 11th consecutive quarterly sales decline.

Shares in HP closed down 2.3 percent at $31.78, after the company inadvertently posted the results on its website more than half an hour before the closing bell.

HP, whose sprawling global operations have more than 250,000 employees, had originally planned to shed 34,000 jobs as part of its corporate overhaul. On Thursday, it estimated 11,000 to 16,000 more positions needed to go, scattered across different countries and business areas.

Whitman said HP continues to find areas to streamline across the company's broad portfolio, which encompasses computing, networking, storage and software. But research jobs, which are vital for innovation and long-term growth, will continue to grow.

HP is looking to cut back more in "areas not central to customer-facing and innovation agendas," she said in an interview, rather than areas like research. "That's not what we're doing here. You need to look at the R&D spending, which is up."

The Silicon Valley company is trying to reduce its reliance on PCs and move toward computing equipment and networking gear for enterprises, part of Whitman's effort to curtail revenue declines and return the world's No. 1 PC maker to growth.

HP recorded sales of $27.3 billion in its fiscal second quarter, ended April 30, just shy of the $27.41 billion Wall Street had expected.

Whitman said China remained a challenging region, though revenue from that country rose in the quarter. U.S. companies like International Business Machines Corp (IBM.N) and Cisco Systems Inc (CSCO.O) have blamed recent lackluster performances on a backlash against American companies in China, in the wake of U.S. spying allegations.

On Thursday, HP forecast full-year earnings of $3.63 to $3.75 a share, compared with Wall Street's estimate for $3.71.

It reported non-GAAP diluted net earnings of 88 cents a share in the fiscal second quarter, up 1 percent from a year earlier and about level with what analysts, on average, had expected.

(Reporting by Edwin Chan; Editing by Steve Orlofsky and Richard Chang)

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