Hewlett-Packard NZ 'should escape widespread layoffs'

Thousands of HP jobs are expected to go this week

Researcher IDC expects business as usual for Hewlett-Packard in New Zealand, despite predictions of as many as 25,000 layoffs from HP globally.

"In NZ the local HP office is performing quite well,” says IDC country manager Graeme Muller. “Having grown their FY04 earnings before tax by $7.8 million over the previous year, they should escape any widespread layoffs should they happen.

“As a subsidiary, HP NZ just needs to be perfoming well and it will be to a large extent left alone. So, given that they currently are performing well, with strong hardware and services businesses, IDC believes it will be business as usual for HP NZ."

Hewlett-Packard is widely expect to cut thousands of jobs globally this week in the first large-scale restructuring by its new chief executive officer, Mark Hurd. Hurd, who took the helm at HP in March following the removal of Carly Fiorina, has said he would take steps to reduce costs at the company.

HP plans to announce the restructuring later today, according to a report last week in the online edition of the Wall Street Journal, which cited an unnamed source familiar with the plans. The paper was unable to provide details of the restructuring and said the timing of the announcement may change.

Spokespeople for HP in Europe did not immediately return calls for comment.

Some Wall Street analysts expect anywhere from 5,000 to 25,000 employees to be laid off, according to the Journal report. HP's enterprise computing business, which has done less well than that of some of its rivals, appears particularly susceptible to job cuts, the paper said.

Hurd, who was recruited from NCR, has already made some changes at HP. In June he split its printer and PC groups, which had recently been merged, into two separate divisions, undoing one of the last major changes made by Fiorina. HP laid off 2,000 staff when those groups were merged.

When it reported its second-quarter financial results in May, the company suggested that other layoffs would follow. It said at the time that it would incur costs of US$100 million (NZ$148 million) over the current quarter related to workforce reductions.

Its second-quarter results were slightly ahead of projections. The company reported revenue of US$21.6 billion, up 7% from a year earlier. Net income came in at US$1.2 billion, slightly ahead of analyst forecasts.

Hurd declined to discuss his plans for HP in detail at the time, saying that would be "premature".

"At this stage, I have more work to do to get further beneath the operations of the company," he said at the time. "What's clear to me already, even at this early stage, is that hard work lies ahead of us if we are to get HP's overall financial performance where it needs to be."

HP rival IBM said in May that it planned to reduce its workforce by up to 13,000 employees, mainly in Europe.

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