HP to cut thousands of jobs as earnings miss

Hidden amid Hewlett-Packard's second-quarter report is news that up to 16,000 more jobs are on the chopping block.

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HP Investor Relations

Chugging along its "multi-year journey" to regrowth, Hewlett-Packard turned in its second quarter earnings statement before the closing bell. Based on the report, which dropped mysteriously ahead of schedule this afternoon, that journey is still very much ongoing.

HP, the world's second largest PC vendor behind Lenovo, reported a net income of $1.3 billion, or 66 cents per share. Non-GAAP earnings were 88 cents per share on a revenue of $27.3 billion. Those earnings were up by one percent from the same quarter last year, but the opposite can be said about the revenue results.

Furthermore, Wall Street was looking for earnings of 88 cents per share, but on a revenue of at least $27.41 billion. In response, HP shares started to tumble slightly before the end of normal trading hours on Thursday.

Nearly all of HP's major product departments saw revenue drop on year-over-year basis, with few exceptions. Software overall remained flat, but sub-departments like Software-as-a-Service along with Licensing both ticked up a few points.

Personal Systems also proved to be a brighter spot with revenue up by seven percent annually. Within that unit, desktops and notebooks were each up by six percent, although consumer revenue declined by two percent.

Maintaining her stance that HP is right on schedule for the aforementioned recovery journey, CEO Meg Whitman reflected on the first half of HP's fiscal year in prepared remarks:

"With each passing quarter, HP is improving its systems, structures and core go-to-market capabilities. We're gradually shaping HP into a more nimble, lower-cost, more customer- and partner-centric company that can successfully compete across a rapidly changing IT landscape."

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HP Investor Relations

For the current quarter, analysts expect HP to deliver earnings of 89 cents per share on a revenue of $27.09 million.

HP followed up with a non-GAAP earnings guidance range of 86 to 90 cents per share. For fiscal 2014, HP projects earnings to fall between $3.63 to $3.75.

UPDATE: It turns out the missed revenue target was only the beginning of the bad news from HP.

When the complete version of the Q2 statement was subsequently released a few minutes later, it revealed that thousands more jobs are now on the chopping block:

"In May 2012, HP adopted a multi-year restructuring plan designed to simplify business processes, accelerate innovation, lower costs and deliver better results. HP previously estimated that 34,000 positions would be eliminated in connection with the plan. As HP continues to reengineer the workforce to be more competitive and meet its objectives, the previously estimated number of eliminated positions will increase by between 11,000 to 16,000."

While acknolwedging that some businesses are performing better than others (sometimes with unforeseen results), Whitman assured shareholders during the quarterly earnings conference call today that HP is now starting to see benefits of investments in "key technologies."

HP Chief Financial Officer Cathie Lesjak later highlighted expected growth in software, especially SaaS, from products dedicated to big data and security.

Whitman also admitted that HP needs to move faster on these changes, going so far as to proclaim the company must become "maniacally focused."

Part of that focus will presumably stem from internal leadership changes. Whitman briefly noted that Autonomy unit chief Robert Youngjohns will replace George Kadifa serves as head of HP's Software department.

As for the earlier-than-expected earnings report, Whitman apologized for the error, but she did not provide any further explanation.

As for the layoffs, HP executives explained that the restructuring plan (expected to slash more than 45,000 jobs when all is said and done) will affect all departments and geographies, resulting in projected savings of roughly $1 billion.

Lamenting that the headcount reduction needs to occur at all, Whitman stressed "it's the natural turnaround" as HP continues to regroup, positing that it will "create more capacity to invest."

Updates, 2:37 p.m. and 2:48 p.m. PT: Adds more information from the earnings conference call.

This story originally appeared as "HP spills mixed bag of Q2 earnings results early; thousands of jobs cut" on ZDNet.

 

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