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Hewlett-Packard (NYSE:HPQ) has announced that it will be cutting 29,000 jobs under the reorganization plan it announced in May. This is up from the 27,000 initially disclosed. HP says that the cuts will take place through fiscal year 2014, and it will book reorganization expenses of about $3.7 billion. Between layoffs and early-retirement options, the company hopes to generate annual savings of $3.5 billion.
HP shares are down 34.45 percent this year to date, and almost 55 percent over the last two years. The company is hurting due to lower demand for printers, data-center equipment, and consulting services. Increased competition from other industry players like IBM (NYSE:IBM) and Apple (NASDAQ:AAPL), and decreased demand for personal computers in light of the growing mobile and tablet markets are also factors.
HP’s enterprise service business seems to be the hardest hit. Former CEO Mark Hurd acquired Electronic Data Systems in 2008 for $13.2 billion in an effort to push HP into the field. Now, the value of its enterprise services is being written down by about $8 billion and losing 8,000 positions.
HP’s restructuring will be a long and complicated process. As Topeka Capital Markets analyst Brian White said, “They’ve got a log of wood to chop.” We’ll be watching closely to see if the stock, hovering around record lows, will ever come back as a buy.
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