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Wednesday, May 23, 2012

Everything that's wrong with corporatism in one headline
Posted by Jill | 8:09 PM
H-P stock up on results; cutting 27K jobs

Shares of Hewlett-Packard rose Wednesday after the company’s results beat Wall Street’s expectations, and the tech giant unveiled a plan to cut 27,000 jobs.

In a call with analysts, Chief Executive Meg Whitman said, “Overall I feel cautiously optimistic coming out of Q2. Our results appear to be stabilizing. While I wouldn’t say we’ve turned the corner, we are making progress.”

The Palo Alto, Calif.-based company reported a fiscal second quarter profit of $1.6 billion, or 80 cents a share, compared with a profit of $2.3 billion, or $1.05 a share, for the year-earlier period.

Revenue was $30.7 billion, down from $31.6 billion. Adjusted profit was 98 cents a share.

[snip] Analysts were expecting H-P to report earnings of 91 cents a share, on revenue of $29.9 billion, according to a consensus survey by FactSet Research.

For the current quarter, the company said it expects adjusted profit of 94 cents to 97 cents a share. Analysts were expecting $1.02 a share, according to FactSet Research.

The company also unveiled a much-anticipated plan to reduce its workforce, saying it is cutting 8% of its employees, or 27,000 positions, by the end of fiscal year 2014.

H-P said the move will lead to annual savings of $3 billion to $3.5 billion by the end of that fiscal year.

In a statement, the company said it plans to use the savings to “boost investment in innovation around its three areas of strategic focus: cloud, big data and security, as well as in other segments that offer attractive growth potential.”

27,000 people. 8% of Hewlett-Packard's workforce. That's just less than one in every twelve employees who will be offered an early retirement "package", which will boot probably yet more over-50's out of the workforce and into permanent poverty, or will be let go entirely. According to PRI's Marketplace program this evening, most of these cuts will be in the US.

And we're supposed to believe that NOT ONE of these 27,000 people can possibly be trained to do the jobs in the areas of strategic focus? Seriously? Note what happened today: HP beat Wall Street's expectations, and are STILL jettisoning 27,000 jobs. HP is supposed to be one of the "job creators", isn't it? Don't "Rich People Create Jobs"? Let's look at some of the "rich people" who have run HP, shall we?

Which brings us to Meg Whitman, March 2011 - present. Failed California gubernatorial candidate Whitman took the job heading HP because no one else wanted the job. In the beginning, she gave lip service to trying to heal the wounds caused by her most immediate predecessor, promising a philosophy of "Do what we do...better", which is sort of like the Domino's Pizza "We used to really suck, but now we suck less" campaign, which I guess is working for them. It seems that it didn't work so well for HP, because now Whitman seems bound and determined to follow the Apotheker map of looking to cloud computing along with everyone else in the known universe. Today she announced that 27,000 casualties of the Fiorina/Hurd/Apotheker/Whitman clusterfuck will join the ranks of the unemployed.

And what does Meggie get paid for pushing 27,000 people into likely poverty? Well, HP crowed mightily upon her hiring that she would receive only $1 in salary, but that scam always hides some pretty sweet perks, and Meggie is no exception:
The rights to 800,000 stock options will vest on Whitman's first anniversary as HP's CEO if the company's shares have closed at or above $28.31 for 20 consecutive trading days. The price target is 20 percent above the options' stock price of $23.59. That price requirement hasn't been met yet, though HP's stock has closed above $28.31 several times in the past two weeks. The shares gained 57 cents to close Friday at $29.07.

Although the stock has climbed since Whitman took over, it remains 37 percent below its price when Hurd left the company in August 2010.

Another 800,000 options will vest on Whitman's second anniversary on the job if HP's stock has closed at or above $33.03 for 20 consecutive trading days. That's 40 percent above the exercise price.

The remaining 300,000 options vest in annual increments of 100,000 on Whitman's first three anniversaries as CEO. Those awards aren't tied to HP's stock reaching a certain price.

Whitman, 55, also received more than $372,000 in additional compensation that stemmed from cash and stock grants that she received last year while she was a non-executive director on HP"s board.

This year, Whitman will be eligible for a bonus of up to $6 million to supplement her $1 salary if HP does well.

I'm sure the 27,000 people who will lose their jobs will take comfort in knowing that their sacrifice will help add to this Forbes 400 billionaire's already substantial ($1.4 billion) net worth.

UPDATE: Willard Rmoney (sic) weighs in on his BFF Meggie:

GOP presidential hopeful Mitt Romney took some time, in an interview with National Review published Thursday, to praise Hewlett-Packard chief executive Meg Whitman, who lost her 2010 bid to become governor of California. If Whitman, a Republican, had defeated Democrat Jerry Brown, Romney argued, California's finances wouldn’t be in such dire shape now and an $8.5 billion tax hike wouldn’t be on the table:

The governor [Brown] is taking them in the wrong direction. I wish Californians had elected Meg Whitman. She would have been more successful and explained to Californians the need to cut back on spending and eliminate unnecessary programs. There are other states that have very different records. I think it's interesting that the state with the highest or among the highest tax rates in the nation also has the worst or near the worst deficit.
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Blogger Jimbo said...
American capitalism has always hated workers; since the Industrial Revolution they have generally seen them as a liability rather than the critical asset that makes all the difference to a company that succeeds rather than fails. Henry Ford, generally a bastard, at least realized he should pay his employees enough to buy his own product.

Professional services firms are a little different since their entire wealth walks out of the firm at night and comes back in the morning. But even they can fail to invest in their own assets.

The modern elite CEOs and their subservient boards and compensation committees actually seem to believe that CEOs are deities that can - solely by their mysterious magic - create thousands of jobs all by themselves and, of course when they don't thousands more have to be fired to pay for their golden parachutes.

Revolting. But also unsustainable. The American model of predatory capitalism has no long-term future. Some variation on cooperative capitalism or employee-owned companies will eventually replace this dying model unless the economy collapses first.

Anonymous Anonymous said...
The modern elite CEOs and their subservient boards and compensation committees actually seem to believe that CEOs are deities that can - solely by their mysterious magic - create thousands of jobs all by themselves and, of course when they don't thousands more have to be fired to pay for their golden parachutes.

Wrong analogy!
The modern CEO is much more likely to believe that he can generate thousands [millions!?] in revenue solely by his personality. No _employees_ required. Indeed, no employees wanted.

Anonymous Anonymous said...
Soooo...how much of this hacking and slashing is to bump up the value of Ms. Whitman's stock options? (A nefarious practice which has helped lead to the kind of short-term, "me-first" thinking on the part of CEOs, which has contributed mightily to the economic decline of America. So say experts in the field)

I'm just very glad she was never elected governor of our state.