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HP to Lay Off 10 Percent

Hewlett-Packard Co. (NYSE: HPQ) today outlined a sweeping plan to "streamline the company" by eliminating benefits and cutting headcount by 14,500 people, nearly 10 percent of its worldwide workforce.

Over the next six quarters, HP will eliminate pension and medical benefits for future retirees and engage in ongoing layoffs in all divisions. The cuts will save the company $1.9 billion annually, execs say. By fiscal 2007 (HP's fiscal quarters pretty much match the calendar), the pension reduction should save $300 million annually; the layoffs will save $1.6 billion.

New CEO Mark Hurd, appointed in March to replace Carly Fiorina, isn't taking any credit or blame for the changes (see High Hopes in Palo Alto). "I don't want this to be viewed as Mark came in and did all this work... There was a lot of work done by this company before I got here to look at these issues. I focused to bring it to conclusion and maybe added a bit of energy to it," Hurd told journalists on a call today.

Still, Hurd has effectively completed a reversal of Fiorina's key decisions. The controversial Customer Solutions Group (CSG) Fiorina created to unify sales across divisions has been dissolved (see HP Reorg Highlights Storage). Instead, salespeople will be merged back into the company's three main divisions -- the Technology Solutions Group (TSG), which includes Enterprise Storage and Servers (ESS), HP Services, and Software; the Imaging and Printing Group (IPG); and the Personal Systems Group (PSG).

In June, HP also split PSG from IPG, reversing Fiorina's mandate to unify them five months earlier.

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