HP enterprise business to cut another 30,000 jobs

Meg Whitman, president and chief executive officer, HP
HP on Tuesday said it will cut another 25,000 to 30,000 jobs in its enterprise business to manage the weak demand from global markets.

The US-based technology major is splitting into two companies — Hewlett Packard Enterprise, or HPE and HP Inc — on November 1.

Future revenue of Hewlett Packard Enterprise

# Hewlett Packard Enterprise will have more than $50 billion in annual revenue
# Cloud revenue in fiscal 2015 will be approximately $3 billion, growing over 20% annually for the next several years.
# Approximately 37% of Hewlett Packard Enterprise’s revenue will come from ES
# Approximately 7% of Hewlett Packard Enterprise’s revenue will come from Software
# Approximately 50% of Hewlett Packard Enterprise’s revenue will come from EG, spread across servers, storage, networking, and technology services

The latest job elimination — primarily associated with the Enterprise Services (ES) transformation — will be on top of layoffs of 55,000 workers previously announced under Chief Executive Officer Meg Whitman. The job cut is aimed at saving $2.7 billion a year. The job cut will result in a charge of about $2.7 billion, beginning in the fourth quarter, HP said.

Reuters report that the latest job cuts indicate a reduction of the company’s total workforce by at least 10 percent, based on the company’s most recent number of more than 300,000 employees as of October 31, 2014, and reflecting the previously announced reduction of 55,000.

The company indicated the cuts will be global, but provided no specifics. “We’ve done a significant amount of work over the past few years to take costs out and simplify processes and these final actions will eliminate the need for any future corporate restructuring,” Whitman said in a statement.

HP chief financial officer Cathie Lesjak said last month that HP expected the previously announced job cuts of 55,000 under Whitman to increase by up to 5 percent by the end of October.

HP is moving more of its workers to lower-cost locations as part of its efforts to cut costs. In its 2013 fiscal year, the company said 36 percent of the employees in the unit of HPE worked in low-cost locations against 42 percent this year. HP plans to increase that percentage to 60 percent by 2018.

In its fiscal third quarter ended July 31, HP’s revenue from personal computer and printer businesses fell 11.5 percent.

Of the units to be housed in HPE, which will be run by Whitman, sales in enterprise services dropped 11 percent, while revenue at the enterprise group rose 2 percent.

HPE will have revenue of more than $50 billion, and is expected to report adjusted profit of $1.85 to $1.95 per share in 2016, HP said on Tuesday.

Hewlett Packard Enterprise expects fiscal 2016 revenue to grow in constant currency — driven by continued strength in servers, storage and networking, and stabilization in services and software. But currency impact can be three point in fiscal 2016.

Baburajan K
[email protected]

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