Fiorina Says HP to Achieve Cost Cuts Ahead of Schedule

Kicking off a day-long meeting with financial analysts in Boston that was broadcast over the Internet, Fiorina said HP still plans to hack 15,000 jobs out of its 150,000-person work force, with 10,000 of the cuts coming before the end of the fiscal year on Nov. 1. The rest will occur in the next fiscal year.

HP, which closed the $19 billion Compaq deal one month ago, had predicted the acquisition would generate $2 billion of cost savings by 2003 and $2.5 billion by 2004.

Partly because the job cuts are coming faster than originally planned, Fiorina said the company now expects to save $2.5 billion in 2003 and $3 billion the following year.

"We are moving faster and achieving more," she says. "We think moving faster on headcount reductions is good for employees, particularly when it reduces uncertainty."

The job cuts largely are being carried out through voluntary retirement programs rather than layoffs, she says.

The Compaq acquisition developed into one of the country's harshest proxy fights after Walter Hewlett, son of an HP co-founder and until April a member of the board, questioned the company's ability to meet its stated financial goals for the deal.

However, Fiorina says HP's forecasts for the revenue that will be lost as a result of the deal remain accurate and conservative.

"It's amazing how much you can get done when you don't have to count votes,' says Hewlett-Packard's new president, former Compaq CEO Michael Capellas. "It's absolutely extraordinary."

CFO Robert Wayman was expected to provide earnings forecasts later in the meeting. Coming into the day, analysts surveyed by Thomson Financial/First Call were predicting earnings of 20 cents per share in the current third fiscal quarter and 26 cents per share in the fourth quarter.

HP is expecting revenue of $35 billion to $36 billion in the second half of the year, according to a slide for Wayman's presentation that was posted on the Web ahead of time. Analysts had been estimating $36 billion.

In early trading on the New York Stock Exchange, HP shares were up 5 cents at $18.90.

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