It's fair to say 24 May will not go down as a great day in HP history. The firm posted some shocking financial results, alongside making some equally shocking announcements that have led to criticism from many in the industry.
So first up, the headline numbers:
27,000 – the number of its 350,000 employees that HP is planning to lay off, which equates to around eight per cent of its workforce. The cuts are expected to hit all regions, but HP tried to soften the blow by stating they would come mainly through early retirement.
31 – the percentage decline in second quarter profit compared to Q2 2011, along with a three per cent decline in revenue.
11 – the percentage rise in share price on the back of the layoffs announcement.
$3.5bn – the annual amount that HP expects to save due to these staff cuts.
1 – the number of software visionaries HP kicked out.
HP UK customers will rightly be worried about what this news means for ongoing support from the company. According to union Unite, up to 1,600 of HP’s 20,000 UK workforce could lose their jobs. But the share price boost shows that the market has faith in the route HP is taking, which could mean a brighter long-term outlook for the firm.
Chief executive Meg Whitman has certainly had a rocky start at HP since joining last September. The Q2 results are the third set that Whitman has headed up, although she could quite easily dismiss any responsibility for the fourth quarter and full year results ending October 2011.
Q1 2012 saw HP posting a seven per cent decrease in revenue, and profits down by more than 30 per cent, so it’s not surprising the new boss felt the need to do something drastic to try and get the company back on track, even if that means losing almost 30,000 staff.
During a message to her employees, Whitman gave some context to the staff cuts, which anyone running an organisation in these lean times would find it difficult to argue with. She pointed out that the workforce had grown from 304,000 in 2009 to 325,000 in 2010, reaching almost 350,000 in 2011. During the same timeframe, revenue grew by 10 per cent in 2010 and only one per cent in 2011.
But the positive news for the company was that the $3.5bn savings would be put back into R&D, she added, with an aim of making HP the leader in three core areas: cloud, security and information optimisation.
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