MBAC6010-ch9,11,12-discussionarticles2 - July 20, 2005...

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Unformatted text preview: July 20, 2005 Hewlett-Packard to Lay Off 14,500 in Turnaround Effort By GARY RIVLIN; VIKAS BAJAJ CONTRIBUTED REPORTING FROM NEW YORK FOR THIS ARTICLE Hewlett-Packard announced Tuesday that it will lay off 14,500 workers, or nearly 10 percent of its staff, over the next 18 months as part of a revamping plan that the company's executives hope will turn around the struggling fortunes of the giant computer and printer maker. The cuts come four months into the tenure of Mark V. Hurd, who took over as chief executive on April 1. Mr. Hurd was named to lead the company after the board dismissed Carleton S. Fiorina for failing to carry out an ambitious corporate strategy to compete with the likes of I.B.M. and Dell. The company also announced that starting Jan. 1, it would no longer contribute to the pension plans of its employees in the United States. Mr. Hurd would provide no details on the geographical distribution of layoffs except to say that the cuts would be felt worldwide. The majority of Hewlett's employees -- 93,000 out of a total force of 151,000 -- work in offices abroad. The majority of those losing their jobs in the coming months work in support functions, like human resources and finance, or in areas that have been identified as redundant, Mr. Hurd said. The remainder of the cuts will be felt across the company, which sells everything from personal computers, printers and plasma television sets to multimillion-dollar computing systems that large corporations use to operate central data centers. ''Our objective was to lay out a simpler, nimbler, more efficient H.-P.,'' Mr. Hurd said in an interview after Tuesday's announcement. ''We're trying hard to do a simplification of the company and clarify roles and clarify responsibilities while secondarily dealing with cost issues.'' While the company will offer a voluntary retirement program, Mr. Hurd said ''the majority of the head count reductions will be achieved through involuntary actions.'' The company expects to complete the layoffs by November 2006, which marks the start of its fiscal year 2007. By that point, the company estimates that it will save $1.6 billion annually on labor costs with an additional $300 million in annual savings from reduced pension costs. ''Carly's strength was one of vision, but her weakness was one of execution, so Hurd has to come in and clean house,'' said Rob Enderle, an analyst with the Enderle Group, a research firm based in San Jose, Calif. ''He is having to do a fairly sharp reduction to get the costs in line with where they need to be.'' Before joining Hewlett, Mr. Hurd was the president and chief executive of NCR, a maker of computers and automated bank teller machines based in Dayton, Ohio, and was known as a low-profile problem-solver. Despite calls by some financial analysts to jettison one or more business units, if not cleave the company in two, Mr. Hurd said Hewlett would leave unchanged its strategy of offering a full range of digital products and computer services to business and consumers alike. computer services to business and consumers alike....
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This note was uploaded on 05/31/2008 for the course MBAC 6010 taught by Professor Bonner during the Spring '08 term at Colorado.

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MBAC6010-ch9,11,12-discussionarticles2 - July 20, 2005...

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