HP to offer buyouts to 2,500
The computer maker will take a $150 million charge against fourth-quarter earnings as a result of its first buyout program since 1991.
The charge is $50 million more than the company previously had expected, after reporting its third-quarter results in August. Marlene Somsak, an HP spokeswoman, said it is unlikely the charge will rise much further between now and when the company's quarter ends on October 31. HP will report its fourth-quarter results November 16.
"The severance offer starts today and goes until end of the month. We're hoping to get as close to that number as we can," Somsak said. "At times when we had done this before, we had been oversubscribed."
The last time HP offered a severance package to a group this size was in October of 1992, she said. The company, which has 127,000 employees worldwide, has struggled during much of the year to bring down expenses, announcing management pay cuts and temporary office closings.
With the latest round of cuts, HP will be lowering its overall workforce by slightly less than 2 percent. Most of the positions will be cut from the company's test and measurement business.
During the third quarter, HP reported that its test and measurement revenues fell 10 percent from year-ago figures, citing weakness in the semiconductor test industry and economic turmoil in Asia.
HP's third-quarter revenues rose 5 percent over the previous year, to $11 billion, while its earnings for the quarter grew a slight 1 percent over the previous year to $621 million.
Analysts said the increased charge will not spook investors.
"More than likely it won't affect the stock. We'll focus on how the PC and printer business is doing, and until we get new data on this, that will drive the stock," said Philip Rueppel, an analyst with BT Alex Brown.
He added that Wall Street will not be that surprised by the larger charge and that analysts will be able to look beyond it, since it is only a one-time charge.
Reuters contributed to this report.