ARN

Job cuts predicted as HP announces revenue drop

HP has made plans to tighten its belt by culling two per cent of its workforce but the company refused to disclose local implications.

HP has made plans to tighten its belt by culling two per cent of its workforce but the company refused to disclose local implications.

Media sources claimed the vendor announced - via a conference call to analysts - that it was cutting 6400 workers over the next year.

ARN contacted HP Australia but it declined to comment on local financial results or operational numbers.

The news comes as the global vendor giant reported a three per cent drop in its revenues for the second quarter, ending April 30, to $US27.4 billion. Net earnings dropped 17 per cent to $US1.7 billion. In Asia-Pacific, revenue was down 10 per cent to $US10.6 billion and $US4.7 billion respectively. HP chairman and CEO, Mark Hurd, said it was unlikely corporate IT purchasing patterns would change in fiscal 2009.

“We have customers that tell me, ‘We’re just delaying as long as we can until we have to buy,’” he said during a conference call with financial analysts.

“CIOs have been given marching orders that say, ‘Take that infrastructure, keep the infrastructure running... be very particular about new projects you start, and if you can avoid starting that project, avoid starting it.’”

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 acquisition of EDS. Services revenue was up 99 per cent, totalling $8.5 billion for the quarter.

Everywhere else, however, the financial numbers reflected the global slowdown: Storage revenue was down 22 per cent; midrange server revenue dropped 21 per cent; and sales of the company’s industry standard servers and business critical systems were both down 29 per cent.

Sales of desktop PCs dropped 24 per cent, notebooks were down 13 per cent and revenue in the company’s printer division was down 23 per cent.