HP to cut 14,500 jobs

[notiCIas]

HP to cut 14,500 jobs

Computer and peripheral maker aims to save $1.9B annually from job cuts, pension changes.

July 19, 2005: 7:26 AM EDT

NEW YORK (CNN/Money) - Hewlett Packard is cutting 14,500 jobs, or about 10 percent of its staff, the company announced Tuesday.

The company said the cuts, and a restructuring of its retirement benefits, should save it $1.9 billion annually. It will take a $1.1 billion restructuring charge related to the moves.

Shares of Dow component HP (Research) gained in European trading immediately after the announcement.

The company said that the charges will be spread over the next six quarters, beginning in the fourth quarter of fiscal 2005, which ends in October.

HP is looking for savings of between $900 million and $1.05 billion in fiscal 2006. It said about half the savings will be reinvested in the business and half would go to increasing profitability.

The company said the restructuring will move sales and marketing efforts directly into the business units, which it said will provide a tighter link with customers and eliminate layers of management. The majority of staff reductions will come in support functions, such as information technology, human resources and finance, with few sales positions being eliminated.

HP will offer a voluntary retirement program to longer-serving staff based in the United States. It did not give details about how many job eliminations will occur in the United States versus foreign operations, nor did it say how many involuntary job cuts it expected to make.

It also said it will, as of January 2006, freeze the pension and retiree medical-program benefits of current employees who do not meet defined criteria based on age and years of company service. Instead, it will increase its match to 401(K) plans to 6 percent of income from the current 4 percent cap.

The changes in benefits are expected to save the company $300 million annually, with the rest of the $1.9 billion in savings coming from reduced staffing.

The company said the benefit change will not affect those already retired or those close to retirement.