When was the last time HP was NOT restructuring?
Carly Fiorina had her try (wherein the company learned that increasing the number of PR people would probably not address technological problems). Then Mark Hurd had his (wherein the company learned that destroying a fabled R&D effort in order to produce short term EBITDA was probably not a sound long term growth strategy). Then Leo Apetheker did whatever he was paid millions to do or not do. No one seems sure what that was or was not. Now Meg Whitman has announced a massive layoff - @27,000 employees. As if the world will believe for one nano-second that eliminating the engineers, managers and marketers who actually know something and produce stuff will solve all the strategic and technological managerial and governance mistakes of the past 15 years.
Meanwhile a board packed with Silicon Valley egos cavalierly presides over this epic value destruction with no consequences either to their sense of entitlement or to the size of their compensation packages. They just keep hiring new leaders, then approve massive payouts when their latest choice goes down in flames.
We can be sure of a couple of things: management and the board have absolutely no idea whether 27,000 is the right number or not. They are managing to a projected EBITDA line and hoped-for P/E ratio. They also have no idea what the right strategy is now. They missed mobile. Pretty much totally. They are still not a force in business services. They are trying to sell to corporations whose core competency appears to be laying off their own staff. But at least HP understands that approach. Maybe synergies will emerge.
In the meantime, companies like Google, Facebook and Zynga as well as newer startups could benefit. Lots of experienced tech business people are coming on the market. It could be a competitive force multiplier for young enterprises. And their triumph would be sad but fair justice to those putative managers who failed them at HP. JL
Julie Bort reports at Business Insider:
Now that HP has come clean with some details, we'll be the first to tell you why it's not going to fix HP.
HP says that by getting rid of 27,000 jobs (9,000 of them by October), it will save about $3 billion a year. This will supposedly fund "innovation." But HP could do a lot of damage with this layoff, too, by getting rid of some of its best employees.
We're hearing ...
1. HP is laying off the wrong people, employees who still work at the company tell us. Management is targeting people purely based on salary, not skills or performance or the profits employees generate for the company.
Plus, HP is full of cronyism, particularly in the troubled HP Enterprise Services unit, we're told. This is the unit targeted to take a big hit in layoffs, as we've previously reported. Many HP managers get promoted because of who they know, not what they know, employees tell us. "HP needs to hire management consultants and do a complete audit of ability of managers—do a complete management restructuring," an employee told us.
2. HP has been restructuring itself almost continuously for YEARS.
"We note that past restructurings (~50K headcount reduction over 5 years under Hurd) have done little to improve HP’s competitive position or reduce its reliance on declining or troubled businesses (printing, PC, Itanium, etc), nor improve its market-share trajectory in storage or servers," Deutsche Bank analyst Chris Whitmore said in a research note, reports ZD Net. "Barring a significant change in strategic direction, we anticipate protracted declines in HP’s three major businesses (services, printers, PCs)."
3. Employees at HP are not upset. Most have known that layoffs were coming since March. Those who have the political connections feel safe, we're told. Those who don't have been worried about their jobs for months, or longer.
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