Last Friday, there were rumors floating around that HP was going to announce a restructuring plan with its Q2 Revenue Report that they were due to release today. Well, the rumors just about right. By 2014, HP will have cut around 27,000 jobs from their workforce, the amount from each country dependent upon that country's needs and legal requirements. The revenue reports were a mixed bag, with lower revenue that 2011's second quarter, but with higher-than-expected diluted earnings per share.
CEO of HP Meg Wthiman, when talking about the restructuring and job cuts, said,
"These initiatives build upon our recent organizational realignment, and will further streamline our operations, improve our processes, and remove complexity from our business,. While some of these actions are difficult because they involve the loss of jobs, they are necessary to improve execution and to fund the long term health of the company. We are setting HP on a path to extend our global leadership and deliver the greatest value to customers and shareholders."
By the end of fiscal year 2014, the restructuring plan is expected to save the company from $3.0 to $3.5 billion, and they plan on using those savings to reinvest in the company. They will be offering early retirements for those eligible. They also plan to do other things like "supply chain optimization, SKU and platform rationalization, go-to-market strategy simplification and business process improvement." Taken from the press release, here's the bullet points of what HP plans to do:
- HP will invest in research and development to drive innovation and differentiation across its core printing and personal systems businesses, as well as emerging areas. It will also invest in marketing, sales productivity and tools that simplify the customer experience and make it easier to do business with HP.
- Services will invest in accelerating service capabilities in the high client value areas of cloud, security and information analytics by enhancing HP intellectual property. Services will also strengthen its industry orientation and continue to differentiate its service offerings through quality and innovation delivered to clients. Combined, these activities are expected to shift the portfolio to a more profitable mix of higher-growth services. Additional work in lean process methodologies is expected to better serve clients and increase overall efficiencies.
- Software will invest to speed development in the areas of security, big data and the management of application lifecycle and infrastructure solutions, both on premise and in the cloud. It will also further leverage the capabilities of Autonomy and Vertica across the entire HP portfolio.
- Enterprise Servers, Storage and Networking will invest to accelerate its research and development activities to extend its leading portfolio of servers, storage and networking. Together these assets create a Converged Infrastructure which is the foundation for top client initiatives such as cloud, virtualization, big data analytics, legacy modernization and social media.
HP's revenue for the second quarter of fiscal year 2012 was down 3% from the same quarter last year, at $30.7 billion. Both GAAP and non-GAAP diluted earnings per share were down from the previous year's second quarter, but rose above expectations at $0.98 (non-GAAP) and $0.80 (GAAP).
Read the financial report here
and the restructuring announcement here