Are HP's 27,000 layoffs good news?
The market applauds the company's monster cutbacks, which are part of a broad campaign by CEO Meg Whitman to turn the struggling computer giant around.
Hewlett-Packard (HPQ), the world's largest maker of personal computers, announced this week that it was shedding 27,000 jobs, or about 8% of its workforce, in a bid to cut costs and make the once-dominant company competitive in the smartphone era.
The stock market took kindly to the announcement, in which HP also reported a better-than-expected quarterly profit of $1.6 billion, sending its share price up by 9% in after-hours trading.
Do the layoffs signal better days for H-P?
Yes. HP is on the upswing: The company's revenue was strong, and it "delivered another pleasant surprise by offering a forecast that raised hopes that HP may be poised to bounce back," says Michael Liedtke of The Associated Press. The layoffs will save the company as much as $3.5 billion a year, and that cash can now go toward shifting more of HP's software services to a "cloud-computing" model, in which programs are delivered online. That's all for the best, since H-P's lagging efforts in cloud-computing are partly to blame for its decline.
But it still looks like a dinosaur: HP is still struggling to keep up as consumers shift from conventional computers to tablets and smartphones, says Quentin Hardy at The New York Times. While its emphasis on cloud-computing is a good start, the rise of the iPhone and iPad has "made many older products unattractive." It will still be quite a challenge for HP -- which continues to rely on personal computers and printers for revenue -- to get back in consumers' good graces.
And hasn't proved that it can deliver: "Don't get too excited" about HP's better-than-expected report, says Antoine Gara at The Street. While embracing cloud-computing could offset its weakness in the personal computer market, HP's attempts to make money from new software have largely floundered. For instance, HP has big hopes for Autonomy, a software analytics company it bought last year for $11 billion, but so far, Autonomy has been performing poorly. This company is critical for H-P in the coming years, and Whitman has yet to prove that she can make it work.
More from The Week
Letter to the Meg Whitman, HP CEO
From: George McCasland <email@example.com>
Date: Wed, May 23, 2012 at 6:33 PM
Subject: Announced Layoffs
To: Meg Whitman <*******@hp.com>
Dear Ms. Whitman,
Dads House has free information that will be needed by many of those facing a layoff from your company.
I would like to suggest that HP send out a notification to all those people being laid off that if they have a child support obligation, they can get help from their state to have the order modified. That they need to make the official request the moment they have been notified they are listed for release, as it can take up to a year to get a hearing.
This is a right they have under the 1988 Child Support Enforcement Act, and is detailed in the Federal Child Support Enforcement Handbook for Non-Custodial Parents. Unfortunately, the states refuse to distribute the handbook, which is free from the feds. Here is the material from it.
If you are willing, here is a small poster that can be displayed in the employee break rooms with the above link.
I hope you will consider my request, and perhaps have one of your assitants respond to confirm you have received it. You are experiencing some public relations issues right now with this decision, and this might help it.
George R. McCasland, National Moderator
Dads House Educational Center & Groups
Took me a while to find a contact address, and I cc'd it to their Craig Gomez, Media Relations VP, as a backup.
HP (and all American companies to the universe): "American Workers? Are you kidding me? If we don't need no stinking workers, then we really don't need any stinking American Workers.
Copyright © 2014 Microsoft. All rights reserved.
These hot movers could rise by double digits in coming months.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.