Faced with a decline in demand for computers and services, Hewlett-Packard Co. (HPQ) plans to cut around 25,000 jobs or 8 percent of its workforce in an effort to cut costs, reports said Thursday. An announcement regarding this may come next week when the company reports its quarterly results.
The job cuts are expected to include 10,000 to 15,000 positions in the enterprise services group. The company may offer early retirement to thousands of employees. Savings from the cuts are expected to be in billions of dollars.
Personal computer makers are seeing a decline in demand for products as more people turn to tablet devices like Apple Inc.'s (AAPL) iPad.
Worldwide PC shipments rose 1.9 percent to 89.0 million units in the first quarter of 2012 , market research firm Gartner, Inc. said last month. The EMEA region performed better than expected in the quarter while Asia/Pacific performed below expectations, partly due to slow growth in India and China.
Mikako Kitagawa, principal analyst at Gartner, said then, "While the PC industry has high expectations for strong growth in the emerging markets, the slowdown of these countries in this quarter provides a cautionary notice to vendors that the future growth for the PC industry cannot heavily depend on the emerging markets even though PC penetration in these regions is low."
In the first quarter, HP's profit fell 44 percent from last year, hurt by lower sales and weaker margins. The company also forecast second-quarter earnings below estimate. HP's outlook is for GAAP earnings of $0.68 to $0.71 per share and non-GAAP earnings of $0.88 to $0.91 per share.
On average, 25 analysts polled by Thomson Reuters expect HP to report earnings of $0.91 per share for the second quarter. Analysts' estimates typically exclude special items. Analysts see a sales drop of 5.4 percent at $29.92 billion.
HP said in late March that it plans to combine its Imaging and Printing Group with the Personal Systems Group to create cost savings and also to allow greater reinvestment in the business.
HPQ closed on Thursday at $22.06, up $0.03 or 0.14 percent, on a volume of 16.73 million shares. The stock is up half a percent in pre-market trading.
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