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H-P to lay off 27,000 after earnings plummet

Tech giant still has ‘a lot of work to do,’ CEO says

By Quentin Hardy

 |  New York Times  

  May 24, 2012

Hewlett-Packard is one of the largest tech companies, but it has struggled to adapt to changing market conditions.

Paul Yeung/Reuters/File 2006

Hewlett-Packard is one of the largest tech companies, but it has struggled to adapt to changing market conditions.

SAN FRANCISCO — Hewlett-Packard reported sharply lower net income Wednesday and announced that it would lay off 27,000 employees in order to cut costs.

‘‘We exceeded our previously provided outlook and are executing against our strategy,’’ Meg Whitman, HP’s chief executive, said in a statement. ‘‘We still have a lot of work to do.’’

The Palo Alto, Calif., company reported net income of $1.6 billion, or 80 cents a share, for its second fiscal quarter, which ended April 30. Revenue was $30.7 billion. In the comparable quarter a year earlier, HP reported net income of $2.3 billion, or $1.07 a share.

The results were lower than the 91 cents a share in net income projected in a survey of analysts by Thomson Reuters but slightly higher than their projection of $29.92 billion in revenue.

The company’s shares, which were down 3 percent in Wednesday’s session, rose almost 6 percent in extended trading after the earnings announcement.

Hewlett-Packard, one of the world’s largest technology companies by revenue, is a leading producer of personal computers, printers, computer servers, and other gear. It also has a large services business in areas like call centers. HP has struggled for several years, however, because of an inability to adapt to changing markets, and management turmoil.

Last week, company executives said that Whitman intended to cut as many as 30,000 of HP’s 324,000-member workforce. Her goal, they said, is to use the savings to increase the efficiency of the company’s sales force and on creating new products.

HP’s results follow by one day a disappointing fiscal first-quarter report from Dell, one of its largest competitors for personal computers and computer servers. Net income fell 33 percent to $635 million, or 36 cents a share, from $945 million, or 49 cents a share, a year before. Dell reported revenue dropped 4 percent to $14.4 billion from $15 billion a year ago. Dell reported a 12 percent decline in consumer revenue, and smaller declines in both business and government sales.

Dell also forecast second-quarter revenue that fell short of analysts’ estimates.