Hewlett Packard has announced that it is cutting 14,500 jobs worldwide, or 10% of its workforce, and is restructuring its retirement benefits. This will begin in the fourth quarter of 2005. HP estimates that the job cuts, along with the restructuring of its retirement benefits, should save the company US$1.9 billion annually. HP will take a US$1.1 billion restructuring charge related to these actions.

"The HP restructuring is a positive step forward with the potential to improve the company's performance and the experience of its customers. This reflects the same fundamental approach they have consistently represented for the last year, with no change in strategy, no change to products and initiatives, and no split of the business into separate entities," said Martin Gilliland, research director, Gartner Asia Pacific.

"The reductions appear aimed mainly at inefficiencies within the company and are aimed carefully to avoid impacting generation of demand, customer satisfaction or revenue levels."

"We project no significant risk to customers of HP as a result of these changes," added Gilliland. "Short term morale and anxiety issues, common to any large scale reduction in workforce or major reorganization, should not be severe and should fade away as details of the cuts are released. While we anticipate competitors attempting to exploit these distractions, they should not have any material impact on HP success."