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HP Layoffs Cost $177 Million

6/09/2005 09:57:00 AM Eastern

Palo Alto, Calif. — Hewlett-Packard said it incurred about $177 million in “workforce rebalancing charges within certain business segments, primarily for severance and related costs,” in the company’s fiscal first quarter, and $59 million it its second fiscal quarter, for a total of $236 million over the six months, ended April 30.

As a result of these cutbacks, HP said it expects to “reduce headcount” by about 3,000 employees worldwide. Already, 1,600 employees had been terminated as of April 30. The remaining employees are expected to leave the company by the end of the fiscal year, ending Oct. 30.

About $81 million of the severance charges had been paid by April 30, and the remainder is expected to be paid by the end of the fiscal year.

HP, which formalized its restructuring charges and subsequent workforce changes in its 10-Q filing with the Securities and Exchange Commission on Wednesday, said for the three and six months ended April 30, the restructuring charges are included in the company’s business segment results.

Beginning with the third quarter, these charges, which include involuntary workforce reductions and voluntary severance incentives, will not be included in business segment results.

In its fiscal second quarter, HP reported a 7 percent increase in consolidated revenue, to $21.6 billion, up from a year-on-year $20.1 billion. Consolidated net income for the past three months increased 9 percent to $966 million from a year-ago $884 million.

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