Hewlett Packard to cut up to 30,000 jobs from enterprise unit

Elizabeth Weise | USA TODAY

Show Caption Hide Caption Will HP's job cuts help them become more competitive? Sept. 15 -- Hewlett-Packard said it will cut 25,000 to 30,000 more jobs as part of a $2.7 billion restructuring, primarily focused on its enterprise-services division. Bloomberg Intelligence's Anurag Rana has more on "Bloomberg West."

SAN FRANCISCO — Hewlett Packard said Tuesday afternoon that 25,000 to 30,000 people will leave the enterprise division as part of a planned spinoff.

The cuts, meant to cut $2.7 billion in annual costs, represent about 10% of the company's total workforce of 302,000 employees.

Meg Whitman, H-P CEO, is becoming CEO of Hewlett Packard Enterprise, a company focused on software and services for corporate clients. It will trade under the ticker symbol HPE.

The split is expected to be made final on Nov. 1.

The employee departures will save $2 billion annually, the company said.

H-P Inc. will remain focused on printers and PCs.

"Hewlett Packard Enterprise will be smaller and more focused than HP is today,” Whitman said in a statement.

“As a separate company, we are better positioned than ever to meet the evolving needs of our customers around the world," she said.

Whitman said the move would eliminate the need for future restructuring by enabling "a more competitive, sustainable cost structure for the new Hewlett Packard Enterprise."

The cuts will result in a charge of $2.7 billion that will begin in the fourth quarter. In a statement, the company said the cash impact will be approximately $2.6 billion over the next three years, beginning in fiscal 2016.

HP (HP) was up 0.26% in after hours trading on the news.

Whitman announced last year that she planned to split the 75-year-old company in half.

HP was founded in a garage in Palo Alto, Calif. in 1939. It was once one of the behemoths of Silicon Valley.

In recent years it has struggled to reverse sagging sales for its printers and PCs as it faces tough competition from Oracle, IBM and Lenovo, among others.

Such splits have become a trend in Silicon Valley and beyond, with companies breaking off or spinning off a portion of their business to be more focused. Such actions are typically met with a stock boost.