HP To Cut 24,600 Jobs

Hewlett-Packard on Monday unveiled its integration plan for its acquisition of EDS, and it spells bad news for almost 25,000 employees. HP issued a statement in which it said it plans to lay off about 7.5 percent of the combined company's workforce, or about 24,600 employees. Almost half of the reductions will occur in the United States, HP said.

The company told a securities analysts' meeting on Monday that EDS, which it formally acquired in late July, gives the vendor a comprehensive portfolio of IT solutions to help customers on a global scale to manage and transform their technology environments.

HP said in May that it plans to acquire Plano, Texas-based system integrator EDS in a deal worth $13.9 billion.

The workforce reduction, as well as a consolidation of real estate, IT, and procurement services, between the two companies is expected to take about three years, according to HP. However, HP said in the statement, it expects to replace about half of those positions over the next three years to "create a global workforce that has the right blend of services delivery capabilities to address the diversity of its markets and customers worldwide."

HP plans to use its EDS acquisition to provide customers with an improved product portfolio and expanded service delivery capabilities, the company said.

In the statement, Mark Hurd, HP chairman and CEO, said, "HP now has the broadest technology capabilities in the market to meet customer needs today and in the future. HP has a strong track record of making acquisitions and integrating them to capture leading market positions. We will deliver on the promise of HP and EDS for our customers and shareholders."

Ann Livermore, executive vice president of HP's Technology Solutions Group, told the analysts' meeting that the merger with EDS would help the company compete more aggressively for big business customers in a market that will be worth $451 billion by 2010, according to Reuters.

She said the combination of HP and EDS position the combined company to play a disruptive role in the computer and technical services market, long dominated by IBM.

HP is well positioned to help companies cut the costs of managing their technical systems through services such as virtualization and server automation.

The company can also attack the fast-growing centralized data center market with its market-leading position in blade servers and heavy investments in recent years in network management software, she said, according to Reuters.

"This is a market looking to be disrupted," Livermore said. "We have got ourselves positioned to be where the market is moving ... The core trends are very much playing to HP's strengths."

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