HP to Cut 6,400 Workers

May 20, 2009
Profits fell 17%

Hewlett-Packard reported a 17% fall in quarterly net profit on May 19 and said it plans to cut two percent of its workforce, or nearly 6,400 workers, over the next year.

HP said net profit fell to $1.7 billion in the second quarter of its fiscal year from $2.1 billion.

The company, the world's largest manufacturer of personal computers, said revenue was down 3% in the quarter which ended on April 30 to $27.4 billion.

"We will be taking some targeted action to structurally change and improve the effectiveness of our product businesses," Chief financial officer Cathy Lesjak said. "These actions will result in the elimination of approximately two percent of the HP workforce as we further streamline and simplify our organization and supply chain. "These actions will be implemented over the next 12 months."

The only bright spot for HP in the quarter was in its services business, which notched up an operating profit of $1.17 billion in the quarter due to its purchase last year of EDS.

"Our services business continued to deliver strong profitability with an increased deal pipeline and the EDS integration tracking ahead of schedule," said HP CEO Mark Hurd.

HP said revenue from its enterprise storage and servers division fell 28% to $3.5 billion while software revenue declined 15% to $880 million. Computer shipments were flat in a "challenging environment" and the division saw revenue fall 19% to $8.2 billion. Revenue from laptop computers was down 13% while desktop computer revenue fell 24%.

HP said revenue grew 9% in the Americas to $12.1 billion and declined by 11% in Europe, the Middle East and Africa to $10.6 billion. Revenue fell 10% in Asia Pacific to $4.7 billion.

HP said it expects third quarter revenue to be flat and full fiscal year revenue to decline by 4%-5%.

Copyright Agence France-Presse, 2009

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