Despite an eyebrow-raising 27,000 layoffs, Hewlett-Packard CEO Meg Whitman said Thursday that the company is in just the early stages of an ambitious reorganization to turn around a slide in profit.
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Meg Whitman
Speaking to CNBC the day after Hewlett-Packard announced the 8 percent workforce reduction — and a 31 percent earnings drop — Whitman said she's been busy conducting a top-to-bottom reorganization.
The company said the layoffswill be done mostly through retirement and save up to $3.5 billion between now and 2014.
"We're turning around a very big company with five major lines of business," she said. "We're introducing a lot of change, which is absolutely necessary to turn Hewlett-Packard around. My view is we say what we mean, mean what we say. So we wanted to give guidance that took into account the entire landscape that we see over the next three months."
Despite the decline in earnings, HP's first-quarter profit, announced after Wednesday's closing bell, of 98 cents a share beat analyst estimates. Combined with the layoff news, the earnings report helped lift HP shares, which gained more than 5 percent in morning trading.
Asked to quantify where the company stands in its turnaround plan, Whitman said "We're at the beginning — 10 to 15 percent of the way there. We've laid a lot of pipe, we've laid a lot of groundwork. We have a clear focus strategy for the company, we have a clear focus strategy for each of our operating groups, and now we have to execute."
Among the innovations the company plans is a re-entry to the tablet space to try to compete with Apple , as well as improvements in its disappointing printing business and attention to relatively recent acquisition Autonomy, a British software company.
Whitman, the former CEO of Ebay who took the HP reins six months ago, said the company will be introducing eight new laser printers in the fall "that will change the trajectory there."
She also pledged investment in research and development and "tools for people to be more productive," funds for which will come from the layoff savings. She did not specify how much of those savings will go straight to the corporate bottom line.
"This is the beginning of a turnaround and my experience in turnarounds is they are not always linear," she said. "Things don't always just go up and to the right. There's ups and there's downs, there's steps forward, there's steps backwards. So we wanted to be realistic about the guidance."
