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HP to shed 16,000 jobs despite rise in profits due to end of Windows XP support

PC sales helped boost Q2 profits
Fri May 23 2014, 14:30

hp-logo-blueHP WILL LAY OFF up to 16,000 of its workers to reduce payroll costs, despite having reported higher profits for the second quarter this year.

The firm said it will shed another 11,000 to 16,000 jobs on top of existing plans to cut 34,000 staff as it continues to seek cost savings, meaning HP could axe a total of 50,000 jobs if the estimate for the latest round of sackings proves true.

Word of the layoffs comes at the same time HP posted an 18 percent increase in earnings for its second fiscal quarter from $1.1bn in the second quarter of 2013 to $1.3bn in 2014. This was despite a slight decline in overall revenue from $27.6bn to $27.3bn.

One of HP's most successful areas for growth was its Personal Systems unit, which covers PCs and notebooks, where revenue rose seven percent compared to the same period last year, which is probably attributable to HP's strength in the mid-range laptop market as well as the end of Windows XP support, which meant users were encouraged to move to newer devices running the Windows 8 operating system.

HP CEO Meg Whitman said during an earnings call that the end of Windows XP support was helping to grow this area of its business and this could last for some time yet.

"I think we are benefiting from the migration from [Windows] XP to Windows [7 and 8]. We saw that in spades in Japan. We had a very, very strong quarter in Japan as that migration took place," she said.

"We actually think that migration is going to extend for some period of time, maybe another 12 to 18 months, but we also see some momentum in what I would call a long overdue PC refresh and, frankly, the fact that companies are realising there is a need for a productivity tool that's different than just a tablet."

However, other HP divisions did not fare so well, with printing down four percent, enterprise sales revenue down two percent and software sales flat.

Despite this, Whitman said that the numbers proved the firm's much-discussed turnaround is "on track" as it moves to become leaner and meaner.

"With each passing quarter, HP is improving its systems, structures and core go-to-market capabilities," she said.

"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."

Earlier this month, HP revealed plans to extend its reach in the cloud services market with the Helion brand name and a very large wodge of cash.

The Helion brand comes as the result of HP's ambitious plans to unify all of its cloud services under a single architecture. As part of the launch, the company has announced that it will spend $1bn in research and development over an initial two-year period, the fruits of which are likely to accrue not just to HP but also to its partners in the Openstack framework. µ


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