HP to Lay Off About 27,000 by 2014

SAN FRANCISCO (AP) Hewlett-Packard plans to jettison 27,000 workers as the growing popularity of smartphones, the iPad and other mobile devices makes it tougher for the company to sell personal computers.

The cuts announced Wednesday represent the HP's largest payroll purge in its 73-year history. The reductions will affect about 8 percent of Hewlett-Packard Co.'s nearly 350,000 employees by the time the overhaul is completed in October 2014.

HP hopes to avoid as many layoffs by offering early retirement packages.

The company, which is based in Palo Alto, Calif., expects to save as much as $3.5 billion annually from the job cuts and other austerity measures.

News of the cutbacks overshadowed the release of HP's latest quarterly results. The company's earnings and revenue were both better than analysts projected. HP reported sales of $30.7 billion, down 3 percent from a year ago, and a profit of $1.6 billion, down 31 percent.

Press release from HP here.

More, on past HP bloodletting, from the San Jose Mercury News:

HP has taken an ax to its workforce on several other occasions in recent years. In June 2010, it announced it was cutting about 9,000 positions "over a multiyear period to reinvest for future growth." Two years earlier, it disclosed a "restructuring program" to eliminate 24,600 employees over three years. And in 2005, it said it was cutting 14,500 workers over the next year and a half.

In a note to its clients this week, Deutsche Bank analysts said past layoffs "have done little to improve HP's competitive position or reduce its reliance on declining or troubled businesses." And despite HP's assertion that the latest cuts will enable the company to reinvest in other key market areas, Deutsche Bank questioned that rationale because the company "has been restructuring for the past decade..."

In another recent note, analysts at Bernstein Research concluded that HP could save $500 million for every 5,000 people laid off, but warned that their biggest concern based on the first quarter "was HP's apparent lack of competitiveness, as the company grew slower than its rivals across all business units," including personal computers, servers, laser printers and tech services. While "it is too early to write-off the company," they added, "investors view HP as a 'broken' company."