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London tech expert says HP slaughter is no surprise

by LLB Editor
24th May 12 4:01 pm

Hewlett Packard has warned that cutbacks will be made to its UK operation, with around 27,000 jobs being axed.

The California-based technology company, which has six UK sites in London, Bracknell, Bristol, Belfast, Warrington and Erskine, is cutting its global workforce by 8 per cent.

HP, which has a total workforce of almost 350,000 people, has struggled for sales as the market has become dominated by smartphones and tablet computers.

London-based technology expert Olly Mann, who regularly features on Steve Wright in the Afternoon on BBC Radio 2, said HP’s move hasn’t come as a surprise.

“They’ve struggled with their identity in recent years and moved away from what people think of as their core business, which is making computers,” he said.

“When firms show that panic publicly it is often a bad sign.”

HP first entered the tablet market last year, but Apple have such a strong grip on the market that it is difficult for other alternatives to record a profit.

Mann outlined that in order to compete with the iPad, Apple’s competitors have had to go for cheaper options, with only the Amazon Kindle Fire looking like it could possibly give the iPad a run for its money.

HP revealed that with the £2.2bn it will save from the job cuts and other saving measures, the firm will look to invest in growth areas such as “cloud” storage technology.

A HP spokeswoman said: “We do expect the workforce reduction to impact just about every business and region.”

Dr Mike Lynch, chief executive of HP’s Autonomy division, is one of those set to leave.

The Cambridge University graduate is being replaced by Bill Veghte, HP’s chief strategy officer “to help improve Autonomy’s performance”.

Lynch, who formed a stand-alone company in 1996 and sold it to HP last year for £7.1bn – making £500m from the sale, will leave after what HP described as a “transition period”.

It is hoped that HP will be able to reduce redundancies by providing an early retirement programme.

The technology firm revealed workforce plans will vary between countries, depending on legal requirements and consultations with staff representatives.

HP’s chief executive Meg Whitman, who used to be CEO at eBay, has said the cuts are needed to protect the company’s long-term prospects. “While some of these actions are difficult because they involve the loss of jobs, they are necessary to improve execution and to fund the long term health of the company,” she said.

“We are setting HP on a path to extend our global leadership and deliver the greatest value to customers and shareholders.”

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