Anger in UK.

Network World

An announcement that HP will cut more than 900 jobs in the UK by October has prompted anger from the Unite union

HP has announced internally that 934 jobs will be axed in the UK by October.
According to Unite union, HP has a 16,500-strong workforce in the UK, which could also be affected by a further 1,000 job cuts from November, which the union said is a "proportional" part of the 9,000 job cuts worldwide that the company announced last month.

The union is planning to meet with HP in the next two weeks for negotiations.
In a statement, HP said: "[The proposed changes] were first discussed with the HP European Works Council in November 2009 and have been part of an ongoing consultation process since then." HP also said that the "proposed changes" were "part of the company's ongoing review of its business".

However, Unite said that the latest round of job cuts was particularly painful after seeing nearly 4,000 jobs being cut over the past two years since HP took over EDS. "This will create further insecurity and uncertainty in HP with the threat of yet more redundancies to come," said Peter Skyte, Unite national officer for IT and communications. "Our aim is to reduce and to avoid compulsory redundancies. The fact that the company still retains nearly 2,000 temporary staff and contractors merely adds insult to injury," he added.

Although Skyte said that it is "too early" to say whether the union members would go on strike in response to the job cuts, he did not rule out industrial action. In April, after a series of strikes and talks through the Advisory, Conciliation and Arbitration Service (ACAS) regarding a dispute over pay and redundancies, Public Commercial Services (PCS) union were in the process of finalising the details of a pay and redundancy offer for staff working on the Department for Work and Pensions contract. PCS was unable to provide a status update at the time of writing.
Meanwhile, Skyte warned that the job cuts at HP meant that that fewer people were having to do more work.

"Managers are concerned that they don't have enough people to do the work," he said, saying that work for clients, including Rolls Royce and the Ministry of Defence, could be affected.
Unite also said that workers at HP sites in Bracknell, Bristol, Hook, Erskine, Milton Keynes, London and Warrington are likely to be affected by the jobs cull. Last month, HP was forced to pay BSkyB a total of £318 million in full and final settlement of a high profile lawsuit over a failed CRM implementation by EDS ten years ago.

HP to move work to low-cost offshore locations

IDG/Blooomberg and Businessweek

Hewlett-Packard's Enterprise Services business is counting on automation of its services and an expansion of its strategy to move work to low-cost offshore locations like India, to help cut costs and get more efficient, an executive of the company said on Wednesday.

The roll out of automation is also likely to be more efficient at the company's large offshore centers, said Robb Rasmussen, vice president and general manager for Best Shore Delivery of HP Enterprise Services on Wednesday.

"One of the most optimum places for automation is within an offshore location," Rasmussen said. The roll out of technology to automate a service, and the training of staff can be done more efficiently in these locations, as they have thousands of staff serving a large number of clients, he added. HP said earlier this month that it was cutting 9,000 jobs over three years as it restructures its enterprise services business and automates the services it offers enterprise customers.

Some other companies such as Dell have also said they are introducing automation to make their services more efficient. HP said it would invest US$1 billion in this connection, while also hiring 6,000 staff for the new services initiative, including some in services delivery.

In some offshore locations, including India, HP may however see net additions to the number of staff, Rasmussen said. The company is still hiring in India and some other offshore locations, and does not plan a reduction in staff in these countries, he added.

India is already the second largest location for HP's services business in terms of number of staff.
HP also has a majority-owned services subsidiary in Bangalore, called MphasiS, which became part of the company after its 2008 acquisition of Electronic Data Systems.

As its business grows, HP's enterprise services is having an increasing number of staff in offshore locations, Rasmussen said. The company has 14 offshore services centers across Asia, Eastern Europe and Latin America.

Customers are increasingly opting for an "India plus one" offshore delivery model, which includes near-shore delivery from locations in the customer's time zone, in addition to delivery from India, he added.

Automation will further drive down costs, as key services like applications management will be done with fewer people, Rasmussen said.

Link to article : http://www.businessweek.com/idg/2010-06-23/hp-services-to-cut-costs-by-automation-and-offshore-delivery.html

H.P. Will Cut 9,000 Jobs

HP announced Tuesday that it would cut 9,000 jobs (3678 in EMEA) and take a charge of about $1 billion over several years, as it consolidates and automates data centers. A.P.

During the same time period, H.P. will hire 6,000 new workers in sales and service delivery positions, said Jane McMillian, an H.P. spokeswoman. Under MArk Hurd, the company has shaved costs by regularly cutting large numbers of staff. In 2005, Mr. Hurd cut 15,300 jobs, in part by consolidating the data centers running the company’s own operations.

In 2008, after H.P. acquired Electronic Data Systems, it cut 7.5 percent of the company, or 25,000 people, and reduced the salaries of others by 20 percent in some cases. In May 2009, H.P. announced that it would cut 6,420 people.

Mark Fabbi, a vice president and analyst at Gartner, compared Hewlett’s data center division to factory floor during the Industrial Revolution. “In the Industrial Revolution, they put things on an assembly line and didn’t need those jobs anymore,” he said. “This is the same thing applied to H-P, a hundred years later.”

The company said it would record about half of the $1 billion charge in the third quarter and the rest by the end of fiscal 2013. The layoffs and $1 billion charge will result in savings of $500 million to $700 million a year, the company said.

HP criticized for earnings accounting

Hewlett Packard Playing Games with Earnings CNBC, 06/2 , Herb Greenberg

First, housekeeping: Glad to be back!
Second: My inaugural "Herb on the Street" on CNBC (see video below) focused on whether Hewlett Packard is minding the earnings GAAP.

GAAP, of course, is generally accepted accounting principles. My beef: HP [HPQ 47.27 1.69 (+3.71%) ] presents itself to Wall Street as a non-GAAP company and has decided to exclude a $1 billion charge from non-GAAP earnings.

The issue of GAAP vs. non-GAAP is a longtime, simmering issue on Wall Street and it really gets down to this: Should investors view companies the way the companies want to be viewed or the way GAAP intended them to be viewed?

I say the latter, if the charges are not one-time in nature and are part of an ongoing restructuring/acquisitions strategy, which appears to be the case at HP. Acquisitions, in fact, are a stated part of HP's business strategy. (Note its recent deals to acquire Palm [PALM 5.71 0.05 (+0.88%) ] and 3Com.)

Some background:
* Two years ago, HP acquired EDS, the enterprise services company, for $13.5 billion.
* At the time the company said the deal would be accretive to GAAP earnings in 2010.
* Now the company is taking a $1 billion charge over a multi-year period, but only reporting that charge in GAAP results.

The result, in my opinion: Never mind that it appears EDS won't be GAAP accretive in 2010, it would appear that non-GAAP results will be artificially inflated.
Furthermore, it's easy to see why HP likes to keep the charges out of non-GAAP: Over the past three years, as the accompanying chart shows, non-GAAP earnings per share have beaten GAAP earnings per share.

I'm not the only person who has that view. On a conference call held by HP Monday to discuss a new strategy for its enterprise business, Sanford Bernstein analyst Toni Saccanoghi-who is generally known for asking the tough question-asked why the $1 billion charge would only be included in GAAP.

HP CFO Cathie Lesjak responded, saying, "While business charges in non-GAAP are typically more routine, routine rebalancing of activities and adjustments to changing business conditions. So this is really a structural change."

Perhaps, but as Saccanoghi responded in a note: "Given that HP's actions appear to be strategic in nature, we believe this could (and should) raise questions among investors. We note that HP has taken restructuring charges of more than $50 million in 10 out of the last 20 quarters (and restructuring charges of any magnitude in 17 out of the last 20 quarter) and this current charge may reinvigorate investor debate over HP's use of GAAP vs. non-GAAP earnings."
As well it should-and not just as it pertains to HP.

No. 1 Corporate Citizen !

It's not a joke : Corporate Responsibility Magazine gives HP high marks in environment, human rights, employee relations, philanthropy, and more...

HP took the top spot in Corporate Responsibility Magazine’s 100 Best Corporate Citizens list for 2010, rising from fifth place last year. The list is considered the preeminent of its kind.
“Global citizenship is in our DNA at HP. We hold ourselves to very high standards, so we are very pleased and honored to be recognized for our efforts, particularly by this respected source,” said Gabi Zedlmayer, vice president, Global Social Innovation.

Global citizenship is one of HP’s seven corporate objectives, rooted in the company’s founding values and key to success. While this recognition highlights HP’s most recent accomplishments, global citizenship has influenced how it has run its business for more than 70 years.
“Our work in this realm encompasses HP’s commitment to align our business goals with our impacts on society and the planet,” Zedlmayer continued. “We recognize that our actions can make very real differences in the quality of people’s lives around the world, and we will continue to work toward creating a legacy of real and lasting change.”

How the ranking is determined :

The 100 Best Corporate Citizens List is based on more than 360 data points of publicly available information in seven categories, weighted as follows:
Environment — 19.5%
Climate Change — 16.5%
Human Rights — 16%
Employee Relations — 19.5%
Governance — 7%
Philanthropy — 9%
Financial — 12.5%

HP faces strikes in England. Again !

March 22 (Bloomberg and San Francisco Business Times)

The Public and Commercial Services Union said up to 1,000 members working for Hewlett Packard Enterprise Services will take a further four days of strike action in a dispute over pay and job security.

Workers at Hewlett-Packard Co. plants in the north of England plan for four days of strikes, starting next week. The Public and Commercial Services Union, based in London and representing some 300,000 members in the United Kingdom, said as many as 1,000 of its members will strike for four days at HP plants. Workers at some of the sites have already walked off the job for two days earlier this month.

Work stoppages are planned for March 29 and 30 and for April 6 and 7. They'll affect plants formerly run by Electronic Data Systems, which is now owned by HP. The plants are in Newcastle, Washington, Preston, Lytham St. Annes and Norcross.

"There has been growing anger amongst staff since HP took over EDS ... with 3,400 staff already axed across the UK. Staff have been further angered by the imposition of a pay freeze last year and for 2010 despite the company delivering record revenues worth billions of dollars," the union said. Mark Sewotka, the general secretary of the union, said employees at the HP plants felt "betrayed. "Hewlett-Packard bought Plano, Texas-based EDS in 2008 for $13.9 billion and laid off some 25,000 of its workers. Last September, HP renamed the unit HP Enterprise Services. Perennial presidential gadfly H. Ross Perot started EDS in 1962.

Major strike in UK

Computerworld

More than 1,000 HP staff in the Public and Commercial Services Union are set to strike tomorrow after talks to resolve a dispute over pay and job cuts broke down. HP Enterprise Services workers taking part in the strike include those based in Newcastle, Washington, Preston and the Fylde Coast. The action will target four sites working mainly on IT contracts for the Department for Work and Pensions (DWP), the Ministry of Defence (MoD) and General Motors.

The workers' complaint centres on a pay freeze imposed for this and next year, as well as on the 3,400 EDS staff who have been made redundant since HP took over the company in 2008, and the 1,000 job losses planned for the first half of this year. Mark Serwotka, PCS general secretary, said: "Strike action is not a step that our members take lightly. They have worked hard to help the company deliver fourth quarter revenues of $30.8 billion yet have been slapped in the face with job losses and a pay freeze for two years running." Jim Hanson, national officer at PCS, said that the main disagreement with HP's offer is over pay, with HP offering to only remove the pay freeze for two years, rather than permanently. Also, Hanson said that HP is refusing to recognise staff they hired directly as being part of the PCS talks, despite them also being members.

According to HP, 288 union members rejected the company's latest offer and voted to continue with the planned strike. "We are disappointed to confirm that a small number of employees have voted in favour of local industrial action on Friday. A reasonable offer was put on the table by HP, in response to the union's requests, however this was rejected without a counter offer being proposed by the union," HP said. "We will continue to maintain a dialogue with the union in an attempt to avoid any further form of action." The company also said that it has put a plan in place to deal with the impact of the strike action, including reducing non-urgent project work and moving resources to prioritise critical work.

In December, HP narrowly avoided a strike by PCS members by agreeing to sit down to talks at the eleventh hour. HP was then due to meet with the union on December 16 to try and reach a settlement for workers. Last week, HP averted nine strike days that were due to be undertaken by customer service engineers in its CDS business, by agreeing to a confidential deal on pay and pensions with trade unions. Computerworld UK understands that this agreement addressed some of the employee concerns around the potential scrapping of a £2,000 performance bonus scheme and a final salary pensions. However, neither HP nor the Unite trade union gave details of these discussions.