Hewlett-Packard cuts 27,000 Jobs to Save Billions

In an effort to restructure itself, Hewlett-Packard plans to lay off 27,000 workers, which equates to about 8 percent of its workforce over the next two years.

Hewlett-Packard expects to generate a savings of between $3 billion to $3.5 billion by the end of fiscal year 2014. The savings will be reinvested into the company.

“Even though the restructure was a difficult decision because of the job losses, it was necessary in order to maintain the long term health of the company.We are setting HP on a path to extend our global leadership and deliver the greatest value to customers and shareholders.” CEOMeg Whitman said.

Some of the employees will take the early retirement program offered by the company, so the total number of employees affected by the layoffs will be determined by the number of employees opting to make good on the early retirement option. The layoffs are expected to be completed by October 2014.

Hewlett-Packard expects to use the savings to boost three main areas of operation, “cloud, big data and security.” HP shares (HPQ) rose about 7 percent to $22.48 in after-market trading on news of the company’s cost-cutting plan and quarterly results. The share price has fallen nearly 50 percent over the past.

Hewlett-Packard earned $1.6 billion, or 80 cent per share, during its second quarter ending in April. That represented a 31 percent decline from $2.3 billion, or $1.05 per share, at the same time last year.

To pay for severance and other restructuring cost Hewlett-Packard expects to take a pre-tax charge around $1.7 billion in the current fiscal year, which ends in October. The company expects to take additional charges of $1.8 billion through fiscal 2014.

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