HP to slash 24,600 jobs

Times Staff Writer

Hewlett-Packard Co. said Monday that it would cut 24,600 jobs, about 7.5% of the company, as it tried to digest one of its biggest acquisitions in years.

The cuts, nearly half of which will come in the U.S., are designed to help HP integrate its operations with those of Electronic Data Systems Corp., which HP bought in August for $13.2 billion.

The deal should help HP take on IBM Corp. by beefing up its consulting, technical support and other services.

With the purchase of EDS, HP Chief Executive Mark Hurd, who has a reputation for cost-cutting, took on the challenge of finding savings in merging two large firms.


The cuts, which are expected over the next three years, will mostly affect the 142,000 employees of EDS, which is based in Plano, Texas. HP, based in Palo Alto, has 178,000 employees.

In a news release, HP said the cuts were needed “to streamline the combined company’s services businesses.”

“This is inevitable for any integration of this size,” said Ashok Kumar, senior analyst at Collins Stewart. “It’s the right step in the right direction for HP to transform itself in the new landscape to a company based on services.”

In addition to job cuts, HP said, the company plans to trim overhead costs that overlapped with EDS, which was founded in 1962 by H. Ross Perot. The restructuring should result in an annual cost savings of $1.8 billion, the company said.