HP to Cut 9,000 Jobs

Here’s a post which I’d call “thinking out loud” since I can’t decide where I stand. Hewlett-Packard (HPQ) announced today that it’s cutting 9,000 jobs.

HP will take a $1 billion charge for paying severance and modernizing its data centers to provide more automated services to customers, it said today in a regulatory filing. The Palo Alto, California-based company plans to replace about 6,000 of the eliminated positions with workers in different countries.
“These sets of actions will enable HP to grow better than the market,” Ann Livermore, executive vice president for enterprise business, said today on a conference call. “This is a substantial opportunity for us and something that we think is a good opportunity for our clients as well.”
The job cuts come after HP raised its 2010 forecast last month for the third time since November as results beat analysts’ estimates on a revival in business spending. Chief Executive Officer Mark Hurd has expanded into more profitable services as the recession crimped corporate budgets for equipment. He bought Electronic Data Systems Corp. for $13.2 billion in 2008, vaulting HP to No. 2 in services behind IBM.

I’m a big fan of Mark Hurd. He’s done a great job in turning HPQ around after the disastrous tenure of Carly Fiorina (who will probably win California’s GOP Senate primary one week from today). Turnarounds rarely work but this one has. HPQ earnings have grown steadily over the past few years and the stock has outperformed a dismal market.
My worry is that the company might be taking on more than it can afford. I’m not thrilled with the EDS buy and I hate (HATE) the Palm buy. Still, leadership counts and I’m leaning towards trusting that Hurd knows what he’s doing. And as today’s news shows, the company hasn’t grown complacent.

Posted by on June 1st, 2010 at 2:17 pm


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