HP Reveals Job Cut Plans in SEC Filing

Days after several financial analysts stated that Hewlett-Packard had outperformed expectations and gave it positive marks, the company said it expects to make job cuts in the first half of 2005 that will cost US$200 million, or 4 cents a share.

The cuts will come after the company hired 4,000 people in the quarter ending October 31.

HP employs about 150,000 workers, but there was no word on how many jobs would go.

Cost Management Move

In a filing with the Securities and Exchange Commission, HP wrote: “As a part of their ongoing cost structure management, HP’s various businesses routinely review the size of their work force and make adjustments they deem appropriate after evaluating a variety of factors.”

HP said the cuts would occur across the board, but in an analyst call last week, the company stated that it would make cuts in its server and storage groups that were originally planned for fiscal 2006.

In a Lehman Brothers report written November 17, analyst Harry Blount said, “We continue to believe HPQ is a value story. However, in order for the stock to move appreciably higher, investors will need to be convinced that HP can set realistic financial goals and consistently achieve them.”

Most Groups Profitable

The company made a profit in all groups except software, although gross margins fell, HP said last week.

Prudential Equity Group also said that HP managed fourth quarter results above its predictions, but maintained its neutral rating on its stock.

“More consistency in execution and increased visibility into resolution of longer-term strategic challenges would be necessary before we look to move to a higher rating, however,” stated the report, written by Steven M. Fortuna, Scott Ross and Jeffrey A. Constantino.

HP estimated revenue in the first half of fiscal 2005 would be between $41.8 billion and $42.3 billion, with earnings per share, excluding items, of between 72 cents and 74 cents.

The stock was down 14 cents to $20.06.

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