HP announces 24,600 layoffs in wake of EDS acquisition

Hewlett-Packard will lay off about 24,600 employees over the next three years in an effort to streamline the company following its US$13.9 billion acquisition of Electronic Data Systems.

Hewlett-Packard will lay off about 24,600 employees over the next three years in an effort to streamline the company following its US$13.9 billion acquisition of Electronic Data Systems last month, the company announced Monday.

The layoffs will be part of a three-year restructuring program, HP said in a statement. The company will lay off about 7.5 percent of its workers during that time, with nearly half of the reductions coming from HP's U.S. workforce, HP said. About half the cuts will take place in 2009.

Half of the positions will eventually be replaced, the company said.

"I can assure you, we will nail this integration," HP Chairman and CEO Mark Hurd told financial analysts in a meeting at HP's headquarters that was webcast. The company has mastered integration while buying 30 companies in the past three-and-a-half years, he said.

"We do believe the synergized companies are in a pretty damn strong market position," Hurd said.

The restructuring program is expected to save HP about US$1.8 billion each year, HP said. HP will take a $1.7 billion charge in the fourth quarter of 2008 related to the restructuring program.

The acquisition of systems integrator EDS was intended to give HP a comprehensive portfolio of IT products to help customers manage and improve their technology systems, HP said.

"HP now has the broadest technology capabilities in the market to meet customer needs today and in the future," Hurd said in a prepared statement. "HP has a strong track record of making acquisitions and integrating them to capture leading market positions."

In addition to the job cuts, HP plans to cut costs through synergies in real estate, IT infrastructure and procurement contracts, Hurd said. The integration team has had about 500 full-time and 1,000 part-time members, according to HP.

HP expects EDS to add about $3.5 billion in revenue in the fourth quarter of fiscal 2008, ending in October. In fiscal 2009, it should add between $21.1 billion and $21.3 billion, and in the following year, between $21.7 billion and $22.1 billion.

Costs of the deal will cut HP's earnings per share by between $0.17 per share and $0.19 per share in the fourth quarter, and between $0.06 and $0.11 in fiscal year 2009. By fiscal year 2010, it should add between $0.11 and $0.16 per share, the company said. The company still stands by the fourth-quarter forecast it gave after announcing third-quarter results on Aug. 19.

The acquisition has been well-received overall within EDS' Agility Alliance, a group of partners that includes HP rivals such as Sun and Dell, Hurd said. Most members, even those considered competitors, have reacted favorably, he said, but "a couple" have been less welcoming, he said. Following the acquisition, HP will not force its own products on all its services customers, Hurd said.

Ongoing cost-cutting efforts at HP even before the EDS deal have prepared HP to carry out the coming cuts appropriately, Hurd said. The company has cut its costs twice as much in 2008 as in the year before and will cut even more next year, he said.

"This is a really tough day for us," Hurd said. "As easy as it is to put numbers on paper ... We've got to go do tough stuff."

HP shares (HPQP) were up $0.37 at $45.70 in after-hours trading on Monday after falling $1.64 during the regular trading day on the New York Stock Exchange.

Join the Good Gear Guide newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags HPeds acquisition

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.
Show Comments

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Matthew Stivala

HP OfficeJet 250 Mobile Printer

The HP OfficeJet 250 Mobile Printer is a great device that fits perfectly into my fast paced and mobile lifestyle. My first impression of the printer itself was how incredibly compact and sleek the device was.

Armand Abogado

HP OfficeJet 250 Mobile Printer

Wireless printing from my iPhone was also a handy feature, the whole experience was quick and seamless with no setup requirements - accessed through the default iOS printing menu options.

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?