Hewlett-Packard Co. has cut about 9,000 employees so far as part of the planned layoff of nearly 25,000 workers that it announced in October. Now HP is reducing salaries and cutting back on travel in an effort to avoid being further wounded by the sharp knife of the economic recession.
On Wednesday, HP reported a 13 per cent decline in earnings for its fiscal first quarter, which ended Jan. 31. Net income totaled US$1.854 billion in the quarter, down from US$2.133 billion in the same period a year ago. Revenue grew just one per cent year over year, to US$28.8 billion, and HP said it expects business to decline by two per cent to three per cent in the current second quarter.
The ongoing layoffs announced by HP last fall followed its US$13.9 billion acquisition of Electronic Data Systems Corp. in August. Instead of making more job cuts now, HP CEO Mark Hurd said during a briefing on the Q1 results Wednesday that the company is cutting salaries, “significantly reducing travel” and eliminating or lowering various types of discretionary spending.
Hurd himself will take a 20 per cent cut on his US$1.45 million base salary, for a reduction of about US$290,000. But stock awards and bonuses helped to increase his total compensation to more than US$42 million last year, according to a filing that HP submitted to the U.S. Securities and Exchange Commission.
HP said in a statement issued after the Q1 briefing that the base pay of other members of its executive council will be cut by 15 per cent and that other executives will take 10 per cent salary cuts. The base pay of exempt employees — typically defined as salaried workers — will be reduced by five per cent, and nonexempt — i.e., hourly — employees will have a 2.5 per cent reduction.
HP also said that it will cap matching contributions to workers under its 401(k) plan at a maximum of 4 per cent of eligible employee contributions.