HP confirms 27,000 job cuts as profits dwindle

HP has confirmed reports that it will be cutting 27,000 jobs following a financial quarter in which revenues declined by some $900m.

The cuts will mean the loss of roughly eight per cent of HP's total workforce. One of the highest profile people to be leaving HP is Autonomy founder Mike Lynch, who is being replaced with Bill Veghte, HP's chief strategy officer.

By the end of 2014 the company hopes to see savings of between $3bn and $3.5bn as a result of the cuts. The money will be reinvested in HP's services, software and research and development branches as well as enterprise servers, storage and networking.

"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," said HP president and chief executive Meg Whitman.

"We are setting HP on a path to extend our global leadership and deliver the greatest value to customers and shareholders."

The cuts come as HP reports another tough financial quarter. Revenues over the three-month period were down three per cent over 2011 to $310.7bn, while profits were collapsed by 31 per cent year-on-year, to $1.59bn.

The company's imaging and printing branch was hit particularly hard, as revenues fell by 10 per cent on the heels of a seven per cent drop commercial printer sales and a 13 per cent decline in sales for consumer models.

The enterprise servers, storage and networking brand saw revenue drop by sixZ per cent as both the industry standard server and business critical systems lines were down.

While the results were far from good news for HP, analysts noted that the company was expected to fare even worse. Gartner analyst Mark Fabbi told V3 that the job losses at a firm the size of HP had the potential to be far worse.

"Quite honestly, I was surprised that the number was as small as it is and is going to take as long as it is," Fabbi said.

"I thought there was a potential to be even more aggressive."

While HP may have beaten expectations, however, there remain a number of questions about the long-term outlook for the company. Fabbi noted that absent from Meg Whitman's plans were important details on how the company will refocus itself and attack new areas of operation.

"We really need to see a clearer vision, they have been too focused just on the tactical elements," the analyst explained.

"We have not seen what the real strategic areas of investment are and how to take those next steps, we have not seen enough to give us enough confidence in what is coming next."