Money world

SAN FRANCISCO–Hewlett-Packard Co. plans to cut 7.5 per cent of its workforce, or 24,600 jobs, seeking to realize as much as $1.8 billion (U.S.) a year in savings from its recent acquisition of Electronic Data Systems Corp.

HP said yesterday it would carry out the cutbacks over the next three years, while replacing about half the jobs in new areas of its services business.

It announced the plan ahead of a meeting with Wall Street analysts to detail the merger plans.

Nearly half of the job reductions will take place in the United States, the Palo Alto, California-based company said.

EDS was headquartered in Plano, Texas."We are good at integrating companies … I believe we will do it well," HP chair and chief executive Mark Hurd told financial analysts at the company’s headquarters.

"A head count reduction over a multi-year period makes sense," said Michael Cuggino, who manages about $3.8 billion at Pacific Heights Asset Management in San Francisco, including 370,000 Hewlett-Packard shares. "As a shareholder, I’m happy to see it. It shows they are executing the plan they put out there."

The $13.2 billion acquisition of EDS, a deal announced in May and closed in August, made HP the world’s second largest provider of technology services, up from number five previously.

HP says the merger with EDS will help the company compete more aggressively with computer services leader IBM for big business customers in a market that will be worth $451 billion by 2010.

At the time the merger was announced HP counted 178,000 employees on its books and EDS had 142,000 employees.

Hewlett-Packard said the vast majority of the cuts would focus on eliminating overlapping jobs at EDS in corporate functions such as legal, accounting, information technology and human resources, as well as excess office space.

Workforce reduction plans will vary by country, based on local legal requirements and consultation with works councils and employee representatives, HP said.

A spokesperson for HP Canada said it is too soon to tell if the job cuts will affect local operations.

"It’s too early to be able to provide any details," he said, adding that hiring would continue to take place on the technology side over the next few years cashadvance. "We don’t know what the breakdown is going to be."

According to its website, Hewlett in 2001 employed about 1,400 employees at 17 locations across Canada.

With files from Noor Javed

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