Speedy HP makes cost savings, job cuts
Quicker than planned
Hewlett Packard Co told a security analysts' conference yesterday that its merger with Compaq Computer Corp will deliver better than expected cost synergies and that it was moving faster than originally planned on its headcount reductions.
At the same time, the Palo Alto, California-based vendor said it did not expect any substantial bounce back in the market this year, and gave revenue guidance that was lower than Wall Street had been expecting.
CEO Carly Fiorina told analysts that the company expected cost savings to accrue more quickly than originally expected. HP expects savings of $500m this year. The company will achieve run rate synergies of $2.5bn in its fiscal year 2003, a year earlier than expected, and $3bn per year in 2004.
Fiorina said the company's headcount reduction was proceeding ahead of schedule. The firm expects a reduction of 10,000 this year, with about 4,000 of these being voluntary reductions. Another 5,000 jobs will be cut next year. Fiorina said the firm now expected to complete its total 15,000 head count reduction a year ahead of schedule.
The company also told analysts that it expected revenues of $35bn to $36bn for the second half of this fiscal year, which ends in October. This would mean total revenues for the year would be $72.8bn to $73.8bn, down around 9% on last year. Revenues should pickup 4% to 6% in the 2003 fiscal year, and 7% to 9% the following year. The company said its aim is to grow faster than the market as a whole.
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