San Jose, Calif. – Hewlett-Packard Co. is widely expected to cut thousands of jobs this week as part of a long-expected restructuring that will attempt to bring the computermaker’s costs in line with business and its rivals’ numbers, according to industry analysts.
The exact timing and number of layoffs isn’t known, though observers speculate layoffs could range between 5,000 and 25,000 positions. The company, whose offerings range from digital cameras and printers to computers and corporate consulting, has 150,000 workers worldwide.
H-P employs 6,000 people in Fort Collins, Loveland, Colorado Springs and Littleton. The locations, according to H-P officials, handle a variety of operations:
Fort Collins: research and development for workstations, management software, operating systems, digital imaging and printing, along with consulting services.
Loveland: storage and workstation research and development, customer support, call centers.
Colorado Springs: storage research and development, customer support, sales and managed-services call centers;
Littleton: sales and support.
Shares of H-P gained 32 cents, or 1.3 percent, to close at a 52-week high of $24.94, in Friday trading. The stock has gained about 15 percent since H-P named NCR Corp. executive Mark Hurd as its new chief executive in late March, replacing the ousted Carly Fiorina.
Hurd has made no secret of his intent to reduce expenses at the Palo Alto, Calif.-based company. In May, he told financial analysts that H-P’s cost structure is “off benchmark in many areas.”
Alexa Hanes, an H-P spokeswoman, declined to comment Friday on “rumors and speculation.” Some H-P workers have taken to calling the upcoming news “the Big One,” according to the San Jose Mercury News.
In a research report Thursday, Moors & Cabot analyst Cindy Shaw said a management reorganization could be announced as early as Monday – and could include as many as 25,000 job cuts. She also said the company might announce the expected retirement of chief financial officer Bob Wayman.
Shaw did not provide details of how she obtained that information.
In June, Sanford C. Bernstein & Co. analyst Toni Sacconaghi estimated the job cuts would range between 7,500 and 15,000 with the H-P enterprise and services division “likely to present the biggest opportunities.”
He also said H-P’s research and development spending is nearly $1 billion higher than the sum of its relevant competitors.
“We think H-P is rife with cost-improvement opportunities,” Sacconaghi wrote in the research report, adding the company could realize annual savings between $750 million and $1.5 billion.
Richard Chu of SG Cowen & Co. said it’s likely that between 10,000 and 15,000 jobs will be cut in the upcoming announcement. Chu expects cost reductions of $1 billion for fiscal 2006 and about $1.4 billion the following year.
H-P’s core strength is in printers and imaging, but it wants to diversify. The problem is that it faces competition from super- efficient Dell Inc. in low-end offerings such as personal computers. At the same time, it competes against well-established International Business Machines Corp. in the more profitable area of enterprise hardware and services.
Since joining H-P, Hurd has made several changes, though none is expected to have the impact of the expected major cost cutting.
Last week, Dell Inc.’s chief information officer was hired to fill the same position at H-P. Last month, Hurd split H-P’s personal computer and printer divisions – a marriage that was one of Fiorina’s last moves before her Feb. 9 ouster.
Denver Post staff writer Kimberly S. Johnson contributed to this report.
