Hewlett-Packard to cut jobs, invest $1 billion in expansion

Hewlett-Packard Co. said Tuesday that it would cut about 9,000 jobs and create highly automated data centers as part of its drive to capture a bigger share of the commercial technology services market.

HP said it would invest $1 billion over the next three years in the expansion of its enterprise services division. HP, which has about 304,000 employees, also said it would add about 6,000 jobs in its global sales and services staff.

The Palo Alto, Calif., company provided no details on where the job cuts will occur, but they will probably be concentrated in the operations that HP acquired when it bought Electronic Data Systems, the giant Texas-based tech services company, in 2008. HP said the cuts will result from automating systems and improved productivity.

HP, the world’s largest technology company by revenue, has used that acquisition to expand its business as it has increasingly sought to offer a full range of commercial computing hardware, software and tech services. It competes in this market with IBM Corp. and other giant tech companies, including Cisco Systems Inc. and Oracle Corp.

“Over the past 20 months, we focused on integrating EDS and improving profitability. Now that the integration is largely complete, we have identified significant opportunities to grow and scale the business,” Tom Iannotti, an HP senior vice president, said in a statement.

Analysts reacted favorably to the announcement. “We believe this is another example of how HP is moving beyond its post-EDS integration phase with a focus on top-line growth,” said Aaron Rakers of investment firm Stifel Nicolaus.

HP plans to build the new data centers around its own hardware and software products, which it has been touting to clients as incorporating new features and efficient designs. That’s not a surprise, said Maynard Um, an analyst at UBS, but he added that it should allow HP to lower some of its own costs and capture new business.

The company will use the new data centers to carry out a variety of tech services for its clients. HP expects to save $500 million to $700 million a year once the effort is completed.

Bailey writes for the San Jose Mercury News/McClatchy.