The layoffs will be part of a three-year restructuring program, HP said in a statement. Hp laptop battery The company will lay off about 7.5 percent of its workers during that time, with nearly half of the reductions coming from HP's U.S. workforce, HP said. About half the cuts will take place in 2009.
Half of the positions will eventually be replaced, the company said.
"I can assure you, we will nail this integration," HP Chairman and CEO Mark Hurd told financial analysts in a meeting at HP's headquarters that was webcast. The company has mastered integration while buying 30 companies in the past three-and-a-half years, he said.
"We do believe the synergized companies are in a pretty damn strong market position," Hurd said.
The restructuring program is expected to save HP about US$1.8 billion each year, Hp laptop battery
HP F4098A Battery, HP F4809A Battery, HP F4812A Battery,HP said. HP will take a $1.7 billion charge in the fourth quarter of 2008 related to the restructuring program.
The acquisition of systems integrator EDS was intended to give HP a comprehensive portfolio of IT products to help customers manage and improve their technology systems, HP said.
"HP now has the broadest technology capabilities in the market to meet customer needs today and in the future," HP F4098A Battery, Hurd said in a prepared statement. "HP has a strong track record of making acquisitions and integrating them to capture leading market positions."
In addition to the job cuts, HP plans to cut costs through synergies in real estate, IT infrastructure and procurement contracts, Hurd said. The integration team has had about 500 full-time and 1,000 part-time members, according to HP.
HP expects EDS to add about $3.5 billion in revenue in the fourth quarter of fiscal 2008, ending in October. In fiscal 2009, it should add between $21.1 billion and $21.3 billion, and in the following year, between $21.7 billion and $22.1 billion.
Costs of the deal will cut HP's earnings per share by between $0.17 per share and $0.19 per share in the fourth quarter, and between $0.06 and $0.11 in fiscal year 2009. By fiscal year 2010, it should add between $0.11 and $0.16 per share,HP F4809A Battery, the company said. The company still stands by the fourth-quarter forecast it gave after announcing third-quarter results on Aug. 19.
The acquisition has been well-received overall within EDS' Agility Alliance, a group of partners that includes HP rivals such as Sun and Dell, Hurd said. Most members, even those considered competitors, have reacted favorably, he said, but "a couple" have been less welcoming, he said. Following the acquisition, HP will not force its own products on all its services customers, Hurd said.
Ongoing cost-cutting efforts at HP even before the EDS deal have prepared HP to carry out the coming cuts appropriately, Hurd said. The company has cut its costs twice as much in 2008 as in the year before and will cut even more next year, he said.
"This is a really tough day for us," Hurd said. "As easy as it is to put numbers on paper ...Hp laptop battery
HP F4098A Battery, HP F4809A Battery, HP F4812A Battery, We've got to go do tough stuff."
HP shares (HPQP) were up $0.37 at $45.70 in after-hours trading on Monday after falling $1.64 during the regular trading day on the New York Stock Exchange.
In fact, Hurd reiterated his commitment to make HP's cost structure even more variable and flexible.
Looking for real synergies with EDS
In recessionary times, the IT companies that best absorb the financial body blows will inevitably be the stronger ones left standing once the global economy rebounds. HP will continue implementing rigorous cost controls and new initiatives such as across-the-board salary reductions to make itself as sturdy as possible (for example, HP F4812A Battery, Hurd will take a 20% cut). In addition, HP's success with a full integration of EDS may prove the linchpin to its post-recession track.
HP's Services revenues, primarily due to EDS, increased 116% compared to last year, generating about one-third of the company's total quarterly profit. IT Outsourcing was by far the greatest revenue generator, with $3.9 billion, followed by Application Services with $1.6 billion and BPO with $743 million.
Even with the recession, Hurd said customer response from a HP-EDS combination continues to be positive, although he declined to provide additional details on progress with the EDS integration plan other than to say it remains ahead of schedule. He said HP with EDS is in a position to deliver additional services as customers continue “leaning on cost takeout” in their IT investment plans. We acknowledge that some customers may turn to EDS and its outsourcing capabilities in the name of efficiency, but questions remain around how HP's ongoing EDS integration will deliver the kind of leveraged, full suite of HP hardware, software and services that many expect. Executives from HP's Technology Solutions Group (TSG) – the group that includes EDS – are scheduled to address industry analysts at the end of March, and expectations not surprisingly are running high.
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