HP announces 18% rise in profits, plans to cut up to 16,000 jobs

HP announces 18% rise in profits, plans to cut up to 16,000 jobs

PanARMENIAN.Net - Technology giant Hewlett-Packard (HP) announced an 18% rise in profits to $1.3bn for the second quarter in a statement that was accidently released before U.S. stock markets closed, according to BBC News.

But the firm said that despite rising profits, it plans to lay off an additional 11,000 to 16,000 workers.

HP had previously announced it would cut 34,000 jobs as part of a restructuring announced in 2012.

"I'm pleased to report that HP's turnaround remains on track," said chief executive Meg Whitman in a statement. "We're gradually shaping HP into a more nimble, lower-cost, more customer- and partner-centric company."

However, analysts were disappointed by the firm's revenue growth, which fell 1% from the same period a year ago to $27.3bn.

HP has been hit hard by declining PC sales as consumers shift towards devices such as tablets and smartphones.

Whitman has tried to shift the firm's focus to computing equipment and networking gear for business clients.

HP began a restructuring plan in 2012 that was designed to simplify the company's business processes, accelerate innovation, lower costs and deliver better results.

Whitman said the turnaround remains on track, and added: "With each passing quarter, HP is improving its systems, structures and core go-to-market capabilities. We're gradually shaping HP into a more nimble, lower-cost, more customer- and partner-centric company that can successfully compete across a rapidly changing IT landscape."

HP has not specified when it expects to see the full results of its restructuring strategy. But analysts are suggesting the company should probably take a closer look at its product mix.

"The world has gone mobile for computing, and HP is not exactly the go-to brand at all when it comes to smartphones and tablets," said Jon Ogg at 24/7 Wall St in a blog post.

He added: "Notebooks and PCs are still not hot, and that means that printers, monitors, and other peripherals are hard to sell. That leaves it as an IT brand. As a reminder, HP decided not to spin off its PC unit with the explanation that it was going to be too costly to do so - not very comforting."

HP's personal systems division was the only segment that showed a gain in revenue in the second quarter. Other divisions, namely printing as well as enterprise group and services posted a drop in revenue.

The decline in revenue is one of the main reasons HP is cutting jobs. Andrew Milroy, from consultancy firm Frost & Sullivan, said: "Revenues are declining. So it is cutting staff in anticipation of revenues declining further. HP's cost cutting and restructuring seems to be successful, but HP is struggling to make the jump into the growth market in IT in areas like cloud and mobile."

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