HP Will Cut as Many as 30,000 More Jobs After Split

Hewlett-Packard will shed as many as 30,000 more jobs as it splits into two companies, the company said at a meeting with analysts in San Jose, Calif.

Tim Stonsifer, the incoming CFO of Hewlett-Packard Enterprise, the company devoted to corporate computing that will emerge from the split on Nov. 1, announced the reductions as part of his presentation on guidance. The restructuring will include a $2.7 billion charge.

HP shares fell by 36 cents, or more than 1.3 percent, to $26.75 in after-hours trading after the news was announced.

The new reductions amount to about 10 percent of the new company’s workforce and will save about $2.7 billion in annual operating costs. The new cuts would bring the total jobs eliminated at Hewlett-Packard since Meg Whitman became CEO to about 85,000. The company cut about 55,000 under prior restructuring plans.

The company said it expects HP Enterprise to post earnings in the range of $1.85 to $1.95 per share in fiscal 2016. It didn’t give specific revenue guidance.

The job cuts didn’t stop with HP Enterprise. Cathie Lesjak, incoming CFO of HP Inc., the PC and printing company, said it will cut about 3,300 jobs after the separation. That company expects to earn about $1.67 to $1.77 per share in fiscal 2016.

Most of the cuts will occur in HP’s long-troubled Enterprise Services unit and may be offset by new hires in that unit. The head of the group, Mike Nefkens, outlined a plan under which it is cutting jobs in what he called “high-cost countries” and moving them to low-cost countries. He said that by the end of HP Enterprise’s fiscal year 2018, only 40 percent of the group’s workforce will be located in high-cost countries. “We will be delivering our services from fewer sites” and in countries where labor costs are lower, he said. The plan will save about $2 billion per year, he said.

Enterprise Services is HP’s IT services outsourcing operation and is made up mostly of the company formerly known as EDS, which HP acquired in 2008. It accounted for about $22.4 billion in revenue at HP last year, but sales have consistently declined in the unit for years. The unit is expected to post revenue of about $20.3 billion, or about 37 percent of sales, with a $1 billion operating profit at the end of fiscal 2015.

Whitman, during her own presentation, said that HP Enterprise will have about $5.5 billion in net cash. Asked about possible acquisitions, she said the company will continue to take what she called a “disciplined approach” to M&A deals and cited HP’s recent $3 billion deal for Aruba Networks as an example. “We haven’t done anything stupid in the last four years, and we don’t intend to do anything stupid in the future,” she said.

It was clear what Whitman meant referring to “anything stupid.” She took over as HP’s CEO in the fall of 2011 following HP’s disastrous 2011 acquisition of Autonomy, the British software firm for which it later said it overpaid by more than $5 billion. Whitman’s predecessor, Léo Apotheker, was fired by the HP board of directors after that deal.

HP first announced its plans to separate last year, intending to split into two publicly held companies each with about $50 billion in revenue. HP Inc. will focus on the PC and printing business, while HP Enterprise will be devoted to corporate computing, software and services.

This article originally appeared on Recode.net.