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TECHNOLOGY
Hit by Rivals, Hewlett-Packard Will Cut Jobs
By QUENTIN HARDY MAY 22, 2014
Meg Whitman, the chief executive of Hewlett-Packard, has said that it will
take a long time to get the company on the right course. The quarterly
results released Thursday underlined that a recovery was still in the
distance.
Ms. Whitman also said she would lay off 11,000 to 16,000 employees
at the company, in addition to the 34,000 jobs it already said would be
cut. At the end of 2013, HP employed about 317,500 people globally.
The longer were here, Ms. Whitman, who became chief executive in
September 2011, said in an interview after the earnings release, the more
we realize about the business processes. Its the normal course of business;
its never easy.
HP, until recently the worlds largest technology company in terms of
revenue, has been battered by deep changes in both consumer and
business behavior. Sales of personal computers, its largest area of
business, have been hurt in recent years by competition from tablets and
smartphones. The PCs people do buy are replaced less often. Instead of
buying the companys computer servers and data storage, businesses
increasingly rent computing via large cloud systems. Consumers and
businesses, likewise, are storing more documents and photos in the cloud.
Over all, the company reported revenue of $27.3 billion, down slightly
from a year earlier, and net earnings of $1.3 billion, or 66 cents a share, up
from $1.1 billion. The earnings met the expectations of analysts, according
to a survey by Thomson Reuters, although revenue was about $100 million
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below expectations. Nonetheless, the stock fell about 3 percent from the
time the earnings were inadvertently released, shortly before the close of
Thursdays trading, through after-hours trading.
The market has given them credit for what theyve done, but the
company still has work to do to improve, said Bill Kreher, an analyst with
Edward Jones. Software will be the leading category in tech, and they
dont have much of a presence. Revenue was lower in three of HPs
product groups, including printing, business hardware and business
services. Only PCs, which includes laptops, had higher revenue compared
with a year earlier. A smaller fifth business, software, was basically flat.
Ms. Whitman appeared to feel some urgency about the spotty
performance. PCs, she said, wont hold up all of HP. That business
recovered, she noted, because of a long-delayed upgrade of Microsofts
computer operating system, which pushed many companies to buy new
machines. We expect PCs to decline over the next three years, she said,
and added, We expect to have a greater share of the market.
For the company to recover significantly, however, HP must create
businesses in tune with the times. While HPs tablets were making
headway, she said, the highlight was desktops and notebooks. Sales of
printer supplies, long one of HPs most profitable businesses, will
stabilize, she said, without specifying where that level was. Instead, she
emphasized recent efforts to sell printing as a service to business.
Mr. Kreher, noting the number of people and the amount of capital
tied up in businesses less relevant for the future, said, the company has to
shrink to grow.
The company also recently announced its own cloud computing
initiative, and a joint venture to sell cloud-optimized servers alongside
Foxconn, a low-margin Chinese contract manufacturer. Ms. Whitman said
the deal gave HP the ability to play in the market, while its rival IBM
completely gave up on the business by selling its low-end server business
to Chinas Lenovo.
Ms. Whitman said she had a pipeline of innovative products across a
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number of areas, along with a very compelling offering in the cloud. She
said investors had bid up the value of HPs stock over the last two years on
confidence that these are people who are going to do what they say.
A version of this article appears in print on May 23, 2014, on page B3 of the New York edition with
the headline: Hit by Rivals, HP Will Cut Jobs.
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