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Last Updated: Tuesday, 19 July, 2005, 12:09 GMT 13:09 UK
Hewlett-Packard cuts 14,500 staff
Hewlett-Packard chief executive Nick Hurd
HP boss Mark Hurd says the company must be more competitive
Hewlett-Packard is to lay off about one in ten of its workers as part of its long-awaited restructuring.

The US computer and IT giant said it planned to cut 14,500 jobs over the next 18 months in an attempt to save $1.9bn (1.1bn) a year.

The announcement is the first major strategic move by its new boss, Mark Hurd.

Mr Hurd was brought in to replace Carly Fiorina after she quit in April, following a dispute with the board.

The layoffs are the biggest to hit HP's workforce since Ms Fiorina engineered a $19bn takeover of Compaq in 2002, a move she accompanied by widespread job cuts.

In May, some 2,000 staff in the firm's core printing business accepted voluntary redundancy packages.

'Room for improvement'

HP said it expected most of the jobs to be lost within support areas such as IT, finance and personnel.

But it also said that it intended to integrate sales and marketing more tightly into its business units, dissolving the group responsible for selling to smaller businesses and the public sector. Neither sales nor research and development are to suffer significant cuts.

The plan was "designed to simplify its structure, reduce costs and place greater focus on customers", HP said in a statement.

Shortly after his appointment, Mr Hurd called for HP to tighten up its performance, saying that its 7% rise in sales during the three months to April left "room for improvement".

Benefit changes

HP has promised that it will offer voluntary retirement to long-serving staff based in the US.

And from January 2006 existing pension and retiree medical programmes for remaining staff who are not close to retirement will be frozen.

Instead, the company says it will raise its matching contribution to US employees' 401K plans - retirement savings packages based on buying shares - from 4% of earnings to 6%.

Outside the US, HP said it would offer redundancy packages in line with local laws and - where appropriate - in consultation with works councils and employee representatives.

HP boss Mark Hurd explains why the firm is laying off staff

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