Hewlett-Packard's 27,000 layoffs: Are they actually good news?

The market applauds the company's monster cutbacks, which are part of a broad campaign by CEO Meg Whitman to turn the struggling computer giant around

With Meg Whitman at the help, Hewlett-Packard is shedding 27,000 jobs, which will save the company as much as $3.5 billion a year.
(Image credit: Imaginechina/Corbis)

This week, Hewlett-Packard, the world's largest maker of personal computers, announced that it was shedding 27,000 jobs, or about 8 percent of its workforce, in a bid to cut costs and make the once-dominant company competitive in the smartphone era. The stock market took kindly to the announcement, in which H-P also reported a better-than-expected quarterly profit of $1.6 billion, sending its share price up by 9 percent in after-hours trading. Do the layoffs signal better days for H-P?

Yes. H-P is on the upswing: The company's revenue was strong, and it "delivered another pleasant surprise by offering a forecast that raised hopes that H-P may be poised to bounce back," says Michael Liedtke of The Associated Press. The layoffs will save the company as much as $3.5 billion a year, and that cash can now go toward shifting more of H-P's software services to a "cloud-computing" model, in which programs are delivered online. That's all for the best, since H-P's lagging efforts in cloud-computing are partly to blame for its decline.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE
https://cdn.mos.cms.futurecdn.net/flexiimages/jacafc5zvs1692883516.jpg

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up
To continue reading this article...
Continue reading this article and get limited website access each month.
Get unlimited website access, exclusive newsletters plus much more.
Cancel or pause at any time.
Already a subscriber to The Week?
Not sure which email you used for your subscription? Contact us