is accelerating its cost-cutting with steeper-than-expected layoffs. The company will let go an additional 1,800 employees, in addition to the 15,000 layoffs already scheduled to take place by the end of October 2003.
In a statement today, H-P said the additional job cuts were "due to a continued market slowdown and H-P's clear intent to have a competitive, world-class cost structure." The company added that expectations have changed since its merger closed with Compaq last spring, when it claimed a head count of 150,000.
"In particular, the slowdown in enterprise IT spending is persisting 6-18 months longer than previously estimated by most economists," it said.
As part of its layoff proceedings, in the most recent quarter H-P said it reduced head count by a total of 4,740 people. That figure includes 4,300 people who have retired or who were laid off, plus another 2,000 people who left of their own accord. It subtracts out new hires.
However, the company added that it's still hiring in areas of high demand, like printing and services.
Job Cuts: Long in the Works
Observers had been expecting job cuts of around 15,000 since plans to merge H-P with Compaq were announced last year. Layoffs of that size are equivalent to about 10% of the combined companies' workforce. In June, in light of weakening business trends, CEO Carly Fiorina announced the company would speed up the planned downsizing, cutting its payroll by 10,000 by the end of the company's fiscal year in October.
Since then, prospects for a pickup in the technology industry have grown even dimmer, at the same time H-P has been preoccupied with its own complicated integration. In its first postmerger quarter, H-P posted a net loss of $2 billion, with its computer and enterprise divisions mired in red ink.
H-P and Compaq combined have steadily surrendered market share to fierce rival
over the last year. Meanwhile, in a new competitive threat, Dell formally
announced its entry into the printer business yesterday, where it's likely to take a swipe at H-P's only current source of profits.
In early afternoon trading, shares of H-P were up 13 cents, or 1.1% to $12.42.