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HP To Cut Nearly 25K Employees

9/16/2008 03:07:00 PM Eastern

Palo Alto, Calif. — Hewlett-Packard expects to eliminate about 24,600 employees over the next three years as it works to incorporate newly acquired software company EDS into its business and to cut costs in the process. HP completed its acquisition of EDS on Aug. 26.

The company’s move to streamline its workforce is part of a larger strategic restructuring plan it unveiled at a securities analyst meeting yesterday. HP said its overall goal is to “restructure the EDS business group to streamline costs, invest in growth and drive shareholder value.”

According to HP, the workforce reduction will account for approximately 7.5 percent of its and EDS’s combined workforce. The company said nearly half of the reductions will occur in the United States.

HP said it will provide affected employees with severance packages, counseling and job-placement services.

HP said it plans to replace nearly half of the positions it eliminates over the next three years “to create a global workforce that has the right blend of services delivery capabilities to address the diversity of its markets and customers worldwide.”

Once completed, HP said it expects the restructuring to result in annual cost savings of approximately $1.8 billion.

In the fourth quarter of fiscal 2008 HP will record a charge of $1.7 billion related to the restructuring, $1.4 billion of which it said will be recorded as goodwill and $0.3 billion of which will be recorded as a restructuring charge that will be included in its GAAP financial results.