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Kill all the managers! (Let's start with HP)

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Hewlett-Packard is to "eliminate" 3,000 managers to cope with a small downturn in business.

The company says Q2 sales will be 2-4 per cent lower than Q1, as well as the same period last year. This is the company's second profit warning in just a few weeks - it says it had only "limited visibility" last time around.

American business was to blame for profit warning no.1:
pesky consumers are to blame for profit warning no.2. Oddly enough, consumers aren't consuming consumables and other consumptive items in anything like the numbers that HP thinks they ought to. The upshot is a $150 million charge against inventory and something called capacity write-downs for consumer products.

Consumers are not buying in the US and more worryingly since the sales downturn is not supposed to be here, they are not buying in Europe.

Maybe some kind of boycott is going on, only no-one knows? Or maybe, consumers are buying cheaper computers, printers and consumables from other companies. HP notes "growing softness in the retail sector and increasingly competitive pricing moves". Which means that the price premiums it has traditionally commanded in, say, printers and consumables, are eroding.

It's kind of interesting that HP has 3,000 managers to sack. Why were they employed in the first place? Is this a computer company, or the Civil Service? ®

Related link

Press release: HP expects lower Q2 earnings

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