NEW YORK (Dow Jones)--Hewlett-Packard Co. (HPQ) said it plans to spend $1 billion to automate data centers and make other operational changes in its IT services business, resulting in the shedding of 9,000 jobs over several years.
The world's largest personal-computer maker expects to take a $1 billion charge during a multiyear period. It anticipates the restructuring will generate the same amount in annual savings, or $500 million to $700 million in net savings after reinvestment.
H-P made a leap into providing corporate IT services with its purchase of Electronic Data Systems, or EDS, in 2008, and over the past year slashed costs and cut jobs as part of the integration. Chief Financial Officer Cathie Lesjak said this latest move represents the second phase of joining the companies, where H-P can combine data centers, IT networks and other operations.
"We have an opportunity to further accelerate our competitive advantage," said Ann Livermore, head of H-P's enterprise services business, during a conference call to discuss the changes. She said finding ways to provide automated services to clients is replacing work-force arbitrage, or locating employees in lower-paying areas, as an important driver of success in the services industry.
"We think the next 10 years are going to be about who can automate the delivery of services," she said.
Along with the 9,000 job cuts, H-P plans to hire about 6,000 new workers to add to its sales force and global delivery centers. H-P has about 300,000 employees.
H-P shares closed Friday at $46.01 and were recently down 1.1% to $45.52 in premarket trading. The stock is up 33% over the past year.
The company saw its latest-quarter profit climb as shipments in its core PC business rose on growing consumer demand.
-By Jerry A. DiColo, Dow Jones Newswires; 212-416-2155;
jerry.dicolo@dowjones.comUPDATE: H-P To Cut 9,000 Jobs, Spend $1B In Restructuring - WSJ.com
