HP's Hurd on EDS, job cuts
In a meeting with financial analysts, Chief Executive Mark Hurd defends purchase of EDS as his company announces massive job cuts.
Moments after Hewlett-Packard announced plans Monday to, Chief Executive Mark Hurd defended the company's purchase of EDS, saying it will help the company in the long term.
"The enterprise is big," Hurd said at a meeting with financial analysts. "It's attractive for us and it's heading our way."
As for the integration of EDS, Hurd noted that HP has a history of being able to digest large companies. HP announced plans in May to. The deal closed in August.
"We bought 30 companies in the past four years," he said. "We're good at it."
Although the headlines were sure to focus on the job cuts, which will take place over the next three years, Hurd said the deal's benefits were not limited to cutting jobs. "I can assure you there are other synergies we are looking for in the acquisition," Hurd said.
Following Hurd, HP executive Ann Livermore talked up how the combined companies' services and products lineup. In HP's own house, Livermore noted that the company is doing internally what it hopes to do for customers.
In fiscal year 2005, Livermore noted that it had more people working in IT than it did in its sales force as well as too many applications.
"We had a real spaghetti bowl of things," she said. By the end of fiscal year 2009, Livermore said it will have twice as many customer-related staff as it will in IT as well as getting far more computing power, despite having reduced its total number of servers.
Hurd kicked off the meeting with a reference to the bloodbath on Wall Street that took place earlier Monday after Lehman Brothers filed for bankruptcy and Merrill Lynch announced a hastily put together plan to sell to Bank of America.
"That was a tough day on Wall street," Hurd said. "I hope there's a chance I can capture your attention."
Update: CFO Cathie Lesjak told analysts that the company expects to make about half of the job cuts to be made by the end of fiscal year 2009, spread out roughly evenly over the year.
Although it plans to eliminate more than 24,000 jobs overall, Lesjak said that the company expects to reinvest some of those savings, ultimately adding back about half the number of of jobs being lost in other areas.
"We need to get the EDS cost structure more competitive," she said.