HP to axe 27,000 jobs

Vendor pledges to invest savings into cloud, big data and security as it announces drop in Q2 revenue and profit

HP is to axe 27,000 employees as part of a restructuring drive designed to "fund the long-term health" of the business.

The vendor expects the widely anticipated move to save it $3bn (£1.9bn) to $3.5bn annually by the end of its fiscal 2014, the majority of which it pledged to plough back into the business, particularly in its key strategic areas of cloud, big data and security.

HP expects 27,000 employees to exit by the end of its fiscal 2014, amounting to eight per cent of its workforce. The world's largest PC maker will run an early retirement programme to minimise the number of forced job cuts, which will vary by country depending on local legal requirements and consultation with works councils.

HP expects to achieve additional savings from non-headcount cost reductions. This includes in areas such as go-to-market simplification, supply chain optimisation and SKU and platform rationalisation.

Chief executive Meg Whitman (pictured) said the initiative builds on HP's recent organisational realignment, which saw it merge its PC and printer arms.

"While some of these actions are difficult because they involve loss

of jobs, they are necessary to improve execution and to fund the long-term health of the company," Whitman said.

Following disappointing results from Dell earlier this week, all eyes were on HP as the vendor also last night posted its fiscal second-quarter results. Revenue for the three months to 30 April fell three per cent to $30.7bn as GAAP net profit sank 31 per cent to $1.6bn – above its previous outlook.

By product segment, the Imaging and Printing Group saw the largest revenue decline at 10 per cent, followed by Enterprise Servers, Storage and Networking at six per cent. The Personal Systems Group was flat, while services revenue fell one per cent and software – driven partly by last autumn's acquisition of Autonomy – rose 22 per cent.

HP said it expects to record a pre-tax charge of about $1.7bn in its fiscal 2012 as a result of the restructuring, and a further $1.8bn pre-tax charge through its fiscal 2014.