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HP to cut 27,000 jobs by late 2014

By Michael Liedtke

Associated Press

Published: Wednesday, May 23 2012 9:36 p.m. MDT

SAN FRANCISCO — Hewlett-Packard Co. plans to cut 27,000 jobs as the growing popularity of smartphones, the iPad and other mobile devices makes it tougher for the company to sell personal computers.

The cuts announced Wednesday represent HP's largest payroll purge in its 73-year history. The reductions will affect about 8 percent of HP's nearly 350,000 employees by the time the overhaul is completed in October 2014.

Word of the mass layoff had leaked out in media reports late last week, so the news didn't come as a surprise.

HP hopes to avoid as many layoffs as possible by offering early retirement packages.

The company, which is based in Palo Alto, Calif., expects to save as much as $3.5 billion annually from the job cuts and other austerity measures.

HP CEO Meg Whitman plans to funnel most of the savings into developing more products and services that could help the company adapt to technological shifts. Those changes are driving demand for more mobile computing and for software that is provided over high-speed Internet connections, rather than installed on individual computers.

Investors seemed to be delighted with the shake-up. HP's shares surged $2.42, or more than 11 percent, to $23.50 in extended trading Wednesday after the announcement.

"Workforce reductions are never easy," Whitman said in a conference call Wednesday with analysts. "They adversely impact people's lives, but in this case, they are absolutely critical to the long-term health of the company. Our goal is simple: a better outcome for the customers at reduced cost for HP."

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