“Computer industry bellwether Hewlett-Packard reported a 3 percent drop in revenue as its major lines of business continued to be hammered by the global recession,” Robert McMillan reports for IDG News Service.
“The company also became the latest technology vendor to resort to layoffs in order to cut costs. Over the next 12 months, HP will lay off about 2 percent of its work force, or about 6,000 employees, HP Chief Financial Officer Cathie Lesjak said during a conference call with financial analysts Tuesday,” McMillan reports. “HP employs 321,000 worldwide.”
“The company remained profitable, however, posting results that were in line with analyst expectations. HP recorded a profit of US$1.7 billion on sales of $27.4 billion. Earnings per share were $0.70 for its second fiscal quarter, ended April 30,” McMillan reports.
MacDailyNews Take: Margins, margins, margins. HP has to do a helluva lot of work for relatively little, but we guess that’s what happens when you assemble low-, no-, or negative-margin PCs featuring a bloated, ugly, faulty OS that nobody wants while trying to make up the difference by gouging customers on ink cartridges. Founders Bill Hewlett and Dave Packard would turn over in their graves if they saw the lack of innovation coming out of HP today. HP recorded a profit of US$1.7 billion on sales of $27.4 billion. Contrast that to Apple, which last quarter recorded a profit of $1.21 billion on sales of $8.16 billion (non-GAAP: $1.66 billion profit on $9.06 billion revenue); the same amount of profit generated on a third of the gross revenue! Would you rather work 120 hours a week or 40 to earn the same amount?
McMillan continues, “The quarter’s revenue drop would have been much worse had HP not seen its services sales nearly double, year-over-year, thanks to the company’s Aug. 26 acquisition of Electronic Data Services (EDS). Services revenue was up 99 percent, totaling $8.5 billion for the quarter.”
“HP is in the process of cutting 24,600 EDS jobs as it absorbs the computer services giant,” McMillan reports. “The company’s EDS integration is ahead of schedule, Hurd said, with “roughly half” of those positions now eliminated.”
McMillan reports, “Sales of desktop PCs dropped 24 percent, notebooks were down 13 percent and revenue in the company’s printer division was down 23 percent.”
Full article here.
MacDailyNews Take: Yuck. Condolences to affected employees. This is what happens when you shackle major parts of your once innovative company to a non-innovator like Microsoft. In tough times, nobody wants to pay for mediocre junk (unless they’re being paid to do so in Microsoft commercials). The good news is that Apple’s hiring.
[Thanks to MacDailyNews Reader “James W.” for the heads up.]