What Recovery? Hewlett-Packard to Fire 11-16,000 MORE

Firms are leaving California as fast as possible. Now we find that one of the first technology companies in Silicon Valley is about to fire between 11-16,000 workers. They are no longer needed, so says Meg Whitman, the CEO of the company.

“On the conference call, CEO Meg Whitman stressed that the new cuts came not because the company was worried about being able to sustain its profit growth through the next year, but rather because she saw more opportunities to make cuts without hurting HP’s ability to compete. The savings from the cuts will let the company invest more in new technologies, she said.”

Technology is killing technology workers. Yet at the same time Whitman has asked Congress to expand the H1B visa program so more foreigners can come into the U.S., take American jobs and lower wages. On who’s side is Whitman—Americans or foreigners?

Obama Jobs Tour

Hewlett-Packard to cut additional 11,000 to 16,000 jobs, stock falls on earnings report

Jon Xavier, Silicon Valley Business Journal, 5/22/14

Hewlett-Packard Co. will cut an additional 11,000 to 16,000 jobs as the company pursues its restructuring under CEO Meg Whitman. That brings the total planned cuts to between 40,000 and 50,000 positions, which would equal roughly 15 percent of its global workforce.

According to HP, the restructuring will be mostly complete by the end of this year. It expects to hit about 41,000 job cuts by the end of 2014, with the rest coming by the end of 2015. HP expects to take a $500 million charge related to the cuts, with another $200 million charge coming in the second half of the year. The cuts are expected to result in incremental savings of 2 to 3 cents per share over the rest of the year.

On the conference call, CEO Meg Whitman stressed that the new cuts came not because the company was worried about being able to sustain its profit growth through the next year, but rather because she saw more opportunities to make cuts without hurting HP’s ability to compete. The savings from the cuts will let the company invest more in new technologies, she said.

“The cuts have nothing to do with our confidence in the business. It has to do with having a better understanding of the opportunities we have to make the company better,” Whitman said. “I’ve done a few turnarounds now — obviously nothing this big — but it’s always the case that you see more opportunities the deeper you get into the business.”

Whitman said that there will not be more cuts at the corporate level once the company’s restructuring program is complete.

The news came as part of the Palo Alto company’s fiscal second-quarter earnings, released today. Earnings barely met expectations, with revenue falling slightly faster than anticipated and profit staying right in line with expectations.

HP announced profits of 88 cents per share on revenue of $27.3 billion, in line with analyst estimates of profits of 88 cents per share on revenue of $27.41 billion. That’s about a 1 percent revenue drop over second quarter 2013, when it announced earnings of $27.6 billion. Profits, however, have continued to grow. The EPS number was up about 1 percent year-over-year. And profits came in at about $1.3 billion according to standard accounting, up about 18 percent year over year.

The earnings announcement hit before the markets closed, which gave the Street a few precious minutes to sell furiously before closing up for the day. The stock almost immediately fell 2.7 percent, and closed down 2.46 percent at $31.72.

You might be wondering why the sell-off was so quick and brutal, as layoffs often lift stock prices. The answer is that CEO Meg Whitman is tasked with turning the company around, so investors want to see growth, or at least a slowing decline. Simply, when you’re banking on a company making a turnaround, earnings that are “good enough” just aren’t good enough. HP has managed to beat expectations for the past three quarters, so merely coming in close to the mark this time around is a troubling sign for the strength of the recovery.

 

About Stephen Frank

Stephen Frank is the publisher and editor of California Political News and Views. He speaks all over California and appears as a guest on several radio shows each week. He has also served as a guest host on radio talk shows. He is a fulltime political consultant.