HP to announce mass layoffs

by Paul Wilson | Tuesday, May 22, 2012 | 1303 views

In an attempt to streamline the teetering PC and services business, Hewlett Packard is set to announce yet another round of layoffs , late Wednesday. The number for the job cuts is expected to be somewhere in the “ballpark” of 25,000 employees. This would amount to a seven percent of the total workforce globally. HP, the largest technology firm of the nation by revenue, at present employs a total of 349,600 people globally as per its latest filing with the regulatory agencies.

The management , headed by CEO Meg Whitman, is attempting to reorganize the firm into a more lean and efficient shape . However, that will amount to quite an uphill task.

Even though the PC industry worldwide has been stuck in the neutral for long, but HP has been going at high speed in the reverse. Their PC sales were down by fifteen percent in the holiday season and the sale of consumer computers tumbled by sharp 25 % .

The services business has also sputtered and the once upon a time golden business of printers has seen a stagnation in the last decade. With sales remaining flat, the profit in the printing sector slumped real hard in last few years with the profit down by 10 %  last year.

Out of the job cuts that have been planned ,a large majority will be in the printing division. The unit was merged with the “personal systems” unit in March .They had considered the spinning off of the PC division last year , but later the board announced the hanging on to the critical but low-margin unit.

That decision to stick to the PC division might have been correct , but they have trailed in the tablet market and they haven’t managed to provide a competition in the smartphone industry. With the world going mobile, the relevance of PC and HP is on the decline. HP is not alone in facing troubling tides, with Dell also coming up with data showing lackluster PC performance and dip in sales and revenue for the last quarter.

Such layoffs may help in trimming some of the fat  or in realigning the firm or make some iterative changes but if the prospects of the company have to be improved, something drastic and painful needs to be done. The policy to take cuts in attempt of getting better health, hasn’t worked for them.

In June 2010 , the CEO Mark Hurd , had axed 9000 employees. They had laid off another 275 people after they decided the discontinuing of webOS lineup , purchased from Palm. Even after all this , they have continued on the downward trend and their sales were down by 5 % in last quarter and profit is expected to shed by another 26% .

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