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HP to trim 9,000 jobs in US as part of cost-cutting plan

HP will also cut 8.000 jobs in the European Union as part of a plan to cut 27,000 jobs by fiscal 2014

By , IDG News Service
June 25, 2012 04:45 PM ET

IDG News Service - Hewlett-Packard plans to trim its workforce by about 9,000 in the U.S. as part of its long-term plan to reduce 27,000 jobs worldwide by fiscal 2014, a source familiar with the company's plans said.

HP in May said it was cutting about 8 percent of its workforce through a combination of layoffs and retirement offers in an effort to save US$3 billion to $3.5 billion through fiscal year 2014. At the time, HP said that employee reductions would vary by country.

BACKGROUND: Biggest tech industry layoffs of 2012

HP also plans to reduce 8,000 jobs in the European Union, which is in line with the company's legal obligations to inform and consult with the European Works Council (EWC), a body in the European Union that represents the workers of multinational companies.

HP declined to comment on the layoff plans. A further breakdown on where employee headcounts would be reduced was not available.

The layoffs began last year starting on Oct. 31, when the company's employee count was at around 350,000. HP's reduction in employee count is intended to preserve the long-term health of the company, CEO Meg Whitman said at the time of the announcement in May.

HP's employee count in 2007 was 172,000, but jumped sharply after the company acquired services company EDS in 2008. Since then, the company's employee count has been above 300,000 every year.

A majority of the savings from the restructuring program will be reinvested in the company, Whitman said last month. The company wants to make the buying experience simpler for customers, and is investing in marketing and sales tools. Some of the results are already visible, with the company trying to make computer buying experience less confusing with PCs now organized around core brands that have been successful.

HP is trying to put more focus on the higher-margin enterprise business while reworking its PC business to deliver better margins. Under former CEO Leo Apotheker, the company thought about selling or spinning off its PC business, which was ultimately retained after Whitman was appointed CEO in September last year.

The company's Personal Systems Group (PSG), which deals in PCs and mobile products, is the company's single largest unit, delivering 30 percent of the company's revenue in the second quarter of fiscal 2012, which ended on April 30. The Services unit had 28 percent of revenue, the Imaging and Printing Group accounted for 19 percent and the Enterprise Servers, Storage and Networking group had 17 percent.

On the enterprise side, the company is looking to bring hardware, software and services closer by offering integrated packages. HP's enterprise business continues to revolve around services and hardware but the company wants to become a player in software, as evidenced by the acquisition of analytics company Autonomy for $12 billion last year. The company intends to put its Autonomy software across its entire product portfolio.

Where the savings from the restructuring program will go is anyone's guess, said Charles King, principal analyst at Pund-IT.

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