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September 16, 2008

HP announces largest layoff via EDS

Last night's analyst briefing about the acquisition of EDS gave HP a chance to raise a sweat from the largest number of its workers in the company's history. Hewlett-Packard will lay off almost 25,000 employees as a result of the merger with EDS, the services giant which the company bought this year for more than $13 billion.

That's a massive number of resumes about to float into the world. Compare Apple's total workforce, including retail, at 22,000. Or Google's staff at 20,000. The number of layoffs exceeded analyst expectations. HP shares rose 5 percent on the news, even though the company said it will take a $1.7 billion charge for Q4 to meet expenses for the acquisition.

While your vendor was quick to point out that about half of those layoffs would be replaced with new jobs over the next three years, the numbers set records no matter how they are parceled out. The EDS deal added 80 percent more staff to the HP payrolls, jobs which analysts have said are too heavily based in the US.

Those market analysts reacted favorably to news that about 8 percent of the new HP combined workforce would be looking for work soon. Head count today stands at more than 320,000. HP used the word "restructuring" to define the strategy, a phrase which has already meant layoffs this year in the once-booming Imaging and Printing group.

In a press statement, HP said that reducing the new services workforce will provide a better product.

Streamlining for growth: HP intends to implement a restructuring program for the EDS business group that will better align the combined company’s overall structure and efficiency with the operating model that HP has successfully implemented in recent years.

One analyst quoted in The Wall Street Journal said the massive layoff plan is a strategy to replace costly US services jobs with less expensive overseas positions. HP's stock slid on the May news that the vendor would buy EDS, even after CEO Mark Hurd assured the markets that the deal would improve HP's profitability and get services business growing faster.

10:36 AM in News Outta HP | Permalink

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