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HP to Slash 27,000 Jobs

Revenue plunge prompts major restructuring.

Palo Alto’s backyard computer giant is reeling after announcing Wednesday a 31 percent drop in second quarter profit to $1.6 billion and three percent drop in revenue, to $30.7 billion.

The news came at the same time as another huge announcement: the company has outlined plans for a “multi-year productivity initiative” designed to “fuel innovation and enable investment,” according to a press release. That plan calls for cutting 27,000 jobs by the end of fiscal year 2014.

The company is offering early retirement to affected workers, and says the exact number of layoffs will be determined by how many employees take that deal.

"These initiatives build upon our recent organizational realignment, and will further streamline our operations, improve our processes, and remove complexity from our business," said Meg Whitman, HP president and chief executive officer, in a statement. "While some of these actions are difficult because they involve the loss of jobs, they are necessary to improve execution and to fund 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."

HP's losses were led by their Imaging and Printing Group, which includes their consumer hardware products. Consumer hardware revenue was down 15 percent year over year with a 13 decline in printer units.

The company intends to invest the savings from workforce cuts into each of its business segments, with an emphasis on R&D, notably in its core printing and personal systems businesses and in emerging areas, according to the release. Investments will also be made in marketing, sales productivity, tools that make it easier for customers to do business with HP, cloud computing, and information analytics.

HP’s software division will also invest in security, big data and the management of application lifecycle and infrastructure solutions and double down on Autonomy and Vertica.

On the enterprise side, the company will boost R&D investment in servers, storage and networking.

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