Next Wednesday when it announces its latest financial results, Hewlett Packard is expected to also announce the loss of anything between 25,000 and 30,000 jobs; some 8% of its total workforce. HP has been suffering for a number of years. Current chief executive is Meg Whitman, the company’s third in as many years. Her task is to restructure the business and return its share value to what it was two years ago.
One of the main problems has been falling demand for HP’s range of PCs. This has been gathering pace for some time, and last year the company announced (under previous boss Leo Apotheker) plans that seemed to suggest its PC business would be sold off – but the announcement was botched and merely confused HP customers and analysts. Apotheker was subsequently, not necessarily consequently, fired and replaced by Ms Whitman; who reversed the decision.
But the PC problem is only increasing. Apple’s success with the iPad, and growing use of Android tablets, is if anything increasing pressure on traditional PCs. The workforce’ desire to be able to work anywhere and anytime; and business’ willingness to allow this with formal BYOD policies will only further depress PC sales in the future.
Ms Whitman’s policy is to ‘save and re-invest’. One estimate is that a job reduction of 18,000 would lead to a cost saving of $1.2 billion. Traditionally, cost savings can be used to boost dividends in the short term or strengthen the business in the long term. Ms Whitman is likely to do both, with a sizeable re-investment into future business. The question will be whether to use this to take the route earlier trod by IBM and increase the role of HP as a service and software oriented company; or to further develop its own tablet products to take Apple head on.