2014 is apparently not the best year for employees of Hewlett-Packard as the company expects to cut thousands of jobs before the end of the year.
According to the 10-K paperwork HP filed with the Securities & Exchange Commission (SEC) on December 30, HP will cut 5,000 more jobs by Oct. 31, 2014. The number is more than expected, bringing the total layoff count for its restructuring to 34,000.
The job cuts are a part of the company's multi-year restructuring plan announced in May 2012 which has to be completed by the end of its fiscal year 2014 and is seen to save the company as much as $3.5 billion. The company estimated cutting about 29,000 jobs as of July 2013 with some employees exiting the company via voluntary Enhanced Early Retirement (EER) programs. With the 10-K filing, however, it is apparent that the actual number is greater than previously thought.
According to HP, market and business pressures require the company to eliminate more jobs than previously estimated. "Due to continued market and business pressures, as of Oct. 31, 2013, HP expects to eliminate an additional 15% of those 29,000 positions, or a total of approximately 34,000 positions, and to record an additional 15% of that $3.6 billion in total costs, or approximately $4.1 billion in aggregate charges. HP expects to record these charges through the end of HP's 2014 fiscal year as the accounting recognition," the company said in its annual report.
HP employed over 317,500 people worldwide at the end of its last fiscal year. However, CEO Meg Whitman is optimistic that HP will see traction in 2014. "We believe that 2014 will be the year you will see real recovery and expansion at HP. You should see every business unit recover and grow. Our investments in R&D and IT will begin to kick in. And we will have demonstrated an ability to manage costs in line with revenue," she said in October 2013.
Despite Whitman's efforts, the company may only have very little room for mistakes. In a research note based on HP's fourth quarter results, Sanford Bernstein Senior Analyst Toni Sacconaghi said that the company continued to "struggle with improving its margins and share together, despite substantial cost cuts - particularly in its enterprise business." The job cuts may also boost the company's profitability but it comes with the risk of sapping its technical expertise.
