Hewlett-Packard Cuts 25,000 Jobs After E.D.S. Purchase – NYTimes.com
Posted on: September 17, 2008
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“Hewlett-Packard Cuts 25,000 Jobs After E.D.S. Purchase”
MILLBRAE, Calif. — The computer and printer maker Hewlett-Packard announced on Monday that it would eliminate 24,600 jobs, or 7.5 percent of its work force, as part of its plan for digesting the computer services giant Electronic Data Systems, which it acquired for $13.9 billion in August.
“I think most of you that follow us know I am a big believer that having the most efficient cost structure directly relates to your ability to scale and grow,” Mark V. Hurd, Hewlett-Packard’s chief executive, told securities analysts gathered at a hotel here, near San Francisco’s airport.
Almost half of the job cuts will occur in the United States. The company, based in Palo Alto, Calif., said it expected the reorganization to result in annual cost reductions of nearly $1.8 billion. It said it would record a $1.7 billion charge in the fourth quarter tied to the layoffs.
The layoffs are the start of a three-year plan in which Hewlett-Packard will try to unify its existing services business with its new acquisition. Up to half of the eliminated positions may be refilled over the course of the reorganization, it said.
The purchase gives H.P. added muscle to go up against the technology services leader, I.B.M. Some analysts have said, however, that Electronic Data Systems’ costs are still too high to compete with service firms in India and that the combined company’s breadth trails I.B.M., which has a large consulting arm.
Joe Eazor, the former head of corporate strategy at E.D.S and now a senior vice president at Hewlett-Packard, acknowledged that his former employer lagged industry leaders on crucial performance measures.
“There is still much work that we need to do,” he said.
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