Hewlett-Packard to cut 27,000 jobs by the end of 2014

HP ink cartridges Hewlett-Packard hopes to save up to $3.5bn a year

Related Stories

Hewlett-Packard, the world's largest maker of personal computers, is to cut 27,000 jobs by the end of 2014.

The company said the cuts - about 8% of its workforce - will reduce costs by up to $3.5bn (£2.2bn) a year.

HP said in a statement that the money would be reinvested into the company.

The move was part of a "productivity initiative designed to simplify business processes" and comes as rival products such as the iPad tablet computer eat into HP's sales.

As part of the changes, the head of HP's Autonomy division, Mike Lynch, is being replaced by Bill Veghte, HP's chief strategy officer. Mr Lynch will leave after what HP called a "transition period".

Mr Lynch founded software company Autonomy as a small start-up and turned into one of the UK's largest technology companies.

It was bought by HP last year for more than $10bn.

HP employs about 350,000 people worldwide and about 20,000 in the UK. A spokesman said it was too early to say exactly where the job cuts would hit, but no part of the business would escape some losses.

"We have not yet announced specific plans with regards to specific locations. We do expect the workforce reduction to impact just about every business and region," the spokesman said.

'Exceeded outlook'

Analysis

It's difficult to imagine Autonomy without Mike Lynch. The student who left Cambridge University without a penny to his name dominated the culture of the firm. He built Autonomy after getting a £2,000 loan from a man in a pub. His drive and entrepreneurial flair was fundamental to the growth of the firm. Although many people found him difficult and demanding to work for, he was held in awe by rank-and-file staff.

That's why Autonomy's 300 Cambridge staff are worried about the future. One man, who declined to be identified, said: "Without Mike, we have a grim outlook. He was the reason many people work here. A brain drain of senior people is already under way."

Autonomy's new leader, Bill Veghte, is due to speak to staff in Cambridge on Friday. Many are sceptical that he will be able to rekindle Autonomy's entrepreneurial culture.

News of the job losses overshadowed the release on Wednesday of HP's latest quarterly results. The company's profits and revenues were both better than analysts had estimated.

California-based HP reported a 31% fall in profits in the second quarter to $1.6bn. Revenue in the period fell 3% on a year ago to $30.7bn.

Meg Whitman, HP's chief executive, said: "This quarter we exceeded our previously provided outlook and are executing against our strategy, but we still have a lot of work to do."

The former chief executive of eBay joined HP in September, vowing to turn around the company after a series of problems including a failed tablet computer and an announcement that it was considering an exit from the PC business.

Her predecessor, Leo Apotheker, was ousted after just 11 months on the job.

HP's shares, which fell as much as 5% on Wednesday and closed 3% down, were up 6.6% in after-hours trading on Wall Street.

More on This Story

Related Stories

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

BBC Business Live

  1.  
    12:24: UK GROWTH
    BBC

    Shadow Chancellor Ed Balls responds to the UK growth figures. "People's living standards have been falling month on month," he says. "Wages aren't keeping pace." Somewhat distracting was the rather large-looking spider that flew into view and appears to have kept parts of twitter amused.

     
  2.  
    12:10: SERVICE SECTOR OUTPUT
    Chart showing service sector growth by sub sector

    Lest we forget. Service sector output grew by 3.1% in the year to August, according to the latest ONS figures which are also out this morning. A word of caution though; month on month output was flat. The biggest sub-sector contribution came from business and financial services which added 1.54 percentage points to the overall figure.

     
  3.  
    Via Twitter The Queen

    The Queen, using the Buckingham Palace-based account @BritishMonarchy tweets: It is a pleasure to open the Information Age exhibition today at the @ScienceMuseum and I hope people will enjoy visiting. Elizabeth R.

     
  4.  
    UK GDP Via Email Ben Brettell Senior Economist, Hargreaves Lansdown

    "In many ways the UK is proving to be the archetypal 'goldilocks economy' - not too hot and not too cold. Growth is relatively strong, but inflation remains subdued, which allows the Bank of England to provide continued support via ultra-low interest rates. Of course this will come as scant consolation to workers who have suffered wage increases below the rate of inflation throughout the recovery to date, and savers who continue to receive paltry rates of interest on their deposits."

     
  5.  
    11:23: BASF OUTLOOK CUT
    basf

    German chemical and oil firm BASF has cut its outlook for next year, pointing to slower global economic growth and industrial production. Shares fell 2.4% to €69.34 (£54.65). BASF cut its 2015 forecast for earnings before interest, tax, and erosion in the value of its assets to €10-12bn from €14bn.

     
  6.  
    11:07: EU PAYMENT

    The EU has also pointed out this morning that the UK's contribution to the budget went down in the recession and is going up now relative to its recent economic success. The EU also lets on the UK's net contribution to the EU budget as a percentage of public spending. What would you guess that is? 10%? 2%? Answers to bizlivepage@bbc.co.uk please.

     
  7.  
    10:54: UK GDP
    UK GDP graph

    Economic growth is now 3.4% higher than the previous 2008 peak, the ONS says. The largest contributor to GDP growth came from - you guessed it - services; which increased by 0.7% in the quarter, contributing 0.58 percentage points to the increase in GDP.

     
  8.  
    10:39: UK GDP
    FTSE share graph

    The economic growth figures didn't have much impact on the FTSE 100. That might be because they were in line with expectations, which actually would end up being a bit of a disappointment, given that expectations were factoring in a slowdown in output. The FTSE is still 0.28% below Thursday's close of 6419 at 6401.48. On the plus side, it's not been too bad a week for the FTSE, If it can keep its head above 6400, it'll be 90 points up on the week.

     
  9.  
    10:26: EU PAYMENT

    Some reaction from Brussels finally over the "extra" £1.7bn being paid to the European Union. A spokesman says the additional money is NOT a surcharge or a top up fee or a "punishment for success". It is instead they say "the result of a standard statistical formula being applied." The EU adds it is always the case that countries with bigger economies -the result of having more growth than others - see relative contributions rise.

     
  10.  
    UK GDP 10:16: Via Email
    Chart showing sub sector growth contributions to UK GDP

    IHS Global Insight economist Howard Archer writes that the third-quarter "moderation in growth" was due to some slowdown in services expansion from the very strong rate seen in the second quarter. Meanwhile manufacturing output growth was relatively limited. While the Chancellor may claim that the UK's economic recovery has been "broadly based", the evidence from the ONS chart above - which shows service sector growth outperforming overall UK GDP - would suggest otherwise.

     
  11.  
    10:01: UK GDP
    George Osborne

    Chancellor of the Exchequer, George Osborne has welcomed today's "strong" UK GDP figures. He says the data shows "the UK continues to lead the pack in an increasingly uncertain global economy". With all the main sectors of the economy growing it's clear that our recovery is broadly based, he adds.

     
  12.  
    09:45: UK GDP

    UK economic growth in the year to the end of September stood at 3%, the Office for National Statistics adds.

     
  13.  
    09:30: UK GDP

    The UK economy grew by 0.7% in the three months to September, in line with City forecasts, official figures show. In the previous three months the economy grew by 0.9%. The first three months of the year were initially estimated to have seen growth of 0.8% but that was recently revised back down to 0.7%.

     
  14.  
    09:21: TSB EARNINGS

    TSB shares are up 1.8% in London to 263.70p. Numis analyst Mike Trippitt says the bank's profit beat his estimates in a note to clients. Impairments were lower than the market thought and costs were better.

     
  15.  
    09:07: SPIRIT PUBS TAKEOVER
    pub

    More analysis on Greene King and C&C's offers for the Spirit pub chain. "The really interesting development, in our view, would be for all three businesses to combine. The result would be a leading pubco and a brewer, cider maker and distributor with a much stronger portfolio of brands," say analysts at City broker Canaccord Genuity this morning. "C&C also own Tennents, the leading Scottish lager. Belhaven (Greene King's Scottish estate) is a leading customer."

     
  16.  
    08:51: BANK OF DAVE Radio 5 live

    Dave Fishwick, the minibus salesman who founded the "Bank of Dave" is on Radio 5 live. What does the banking market need? "What we desperately need out there is challenger banks," he says. What's also needed is "tighter control of the bigger banks to prevent greed and corruption," he adds.

     
  17.  
    08:36: MARKET REPORT

    The fallout from Tesco's results yesterday continues today. The supermarket is the biggest faller on the FTSE 100 Index so far this morning down 2.3% to 167.05p. European markets are down generally. The FTSE 100 is down 0.45% to 6390.17, Germany's Dax is down 0.40% to 9011.29 and France's Cac-40 has fallen 050% to 4136.95.

     
  18.  
    08:23: PEARSON EARNINGS
    penguin

    Pearson's chief executive John Fallon says the firm's £50m cost-cutting programme is on track and "momentum in digital, services and emerging market education is building, which will drive a leaner, more cash generative, faster growing business from 2015."

     
  19.  
    08:06: SPIRIT PUBS TAKEOVER

    Could this be the beginning of a bidding war? The pub chain has said it has rejected a takeover proposal from Irish cider maker C&C Group today. Spirit is already in talks with brewer and pub owner Greene King about its proposed £723m takeover offer. C&C, the maker of Magners and Bulmers, has until 20 November to announce a firm takeover offer.

     
  20.  
    07:51: PEARSON EARNINGS

    Pearson has reported flat underlying revenue for nine months to the end of September and a 1% fall in in what it calls headline growth for the period. It blames the strength of sterling against key emerging market currencies for the fall. Penguin Random House has performed well in the third quarter, it adds without giving detail. It says the integration of its businesses is "progressing well and is on track to deliver benefits in 2015 and beyond".

     
  21.  
    07:38: HIKMA WARNING

    Hikma Pharmaceuticals says it has received a warning letter US Food and Drug Administration after an inspection at its manufacturing plant in Portugal. "In the letter, the agency raised issues related to investigations and environmental monitoring at the facility," said the firm, which is taking the letter "very seriously."

     
  22.  
    07:26: TSB EARNINGS
    The TSB logo

    Impairments - that is, bad loans - fell to £23m from £32.2m, said TSB. Loans rose 7.7% to £22bn compared to a year ago, but fell from a peak of £23bn six months ago. TSB won 9.7% of all new or switched bank accounts, it said, adding £500m of deposits.

     
  23.  
    07:18: PEARSON FINANCE CHIEF STEPS DOWN

    Robin Freestone, chief financial officer of Financial Times and Penguin Random House owner Pearson has announced he is standing down after 10 years with the firm, including eight in his current role. He will probably leave the firm in 2015 after a successor has been found, said the firm.

     
  24.  
    07:08: TSB EARNINGS

    TSB third-quarter profit before tax fell 14% to £33.1m compared with the same time a year ago, after operating expenses rose. But revenue swelled 18% to £199m

     
  25.  
    06:54: EU PAYMENT Radio 5 live

    Sarah Hewin of Standard Chartered on 5 live says the payment has to be made in the next few months. That could mean more borrowing, she says.

     
  26.  
    06:41: EU PAYMENT Radio 5 live
    British Prime Minister David Cameron

    Sarah Hewin of Standard Chartered is explaining why the UK has to pay an extra £1.7bn to the EU on 5 live. "The UK has been doing better since 1997 than we thought and that's resulted in this extra payment. The Netherlands will pay more, while France and Germany get a rebate."

     
  27.  
    06:29: AMAZON RESULTS Radio 5 live

    Paul Kavanagh of wealth manager Killik is talking about Amazon's loss-making results last night. "It begs the question about what is happening here with this strategy. The shares fell 11% in after hours [in the US]." Investors may be growing tired of ever-more sales expansion with little profit to show for it, he tells 5 live.

     
  28.  
    06:20: CHALLENGER BANKS Radio 5 live

    Paul Kavanagh of wealth manager Killik says it's difficult for banks to persuade customers they offer something new. When a challenger bank succeeds, the larger banks often take the best ideas, he says on 5 live.

     
  29.  
    06:12: CHALLENGER BANKS Radio 5 live

    Steve Davies is still on 5 live. He says challenger banks are forcing their larger competitors to think more about the customer and service - think Metro bank opening on Sundays. Competing on rates is more difficult, he says. TSB results coming up later.

     
  30.  
    06:03: CHALLENGER BANKS Radio 5 live

    Steve Davies of accountants PwC is on 5 live talking about so-called challenger banks. Can they challenge the largest high street banks? "They have to be able to offer something a little bit different," he says. "The challenge is around innovation," he says. Customer is key, he adds.

     
  31.  
    06:00: Howard Mustoe Business reporter

    Good morning. Get in touch via email blizlivepage@bbc.co.uk and twitter @BBCBusiness.

     
  32.  
    06:00: Matthew West Business reporter

    Morning folks. It's Friday, we're nearly at the weekend. But before that, TSB kicks off bank earnings season and Shire has financials out as well. There's also some service sector data but the big bit of data is the first estimate of third quarter GDP. We'll bring you it all as it happens as always.

     

Features

From BBC Capital

Programmes

  • The smartphone that answers backClick Watch

    Smartphones get smarter – the prototypes that talk and say ouch when you drop them

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.