H P And Sun Sharpen Their Axes

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H-P And Sun Sharpen Their Axes

By: David Utter
2006-06-22

Headcount at both companies will take a tumble as both computer manufacturers plan to address the bottom line by eliminating jobs.

Scott McNealy's tenure as Sun Microsystems (SUNW) CEO was marked by his reluctance to make the kind of job cuts that other high-tech manufacturers made after the dot-com crash in 2001. His successor, Jonathan Schwartz, waited about five weeks before announcing Sun would cut 4,000-5,000 jobs from the company's payroll.

The timing of the job cuts has been the subject of much speculation since Sun made the announcement at the end of May. ZDNet's Tom Foremski has cited a source inside Sun on that timing and wrote that Schwartz will tell staffers and investors about the cuts today.

Sun's stock price has moved up slightly after swinging low to 4.11 during Tuesday's trading. It closed at 4.32 yesterday and added a couple of cents in after hours action according to ECN. Announcing the timing today could give Sun a slight boost, but probably not as much as a larger number of job cuts would do.

Hewlett-Packard (HPQ) will make a greater number of cuts, as its job slashing and operational restructuring plans continue to move ahead.

The company announced this week how it will realign in keeping with the restructuring theme it disclosed back in July 2005. H-P plans to eliminate 15,300 jobs by the end of fiscal 2006. It will also streamline the company by knocking out some of the layers of management.

H-P's realignment involves integrating its Global Operations organization directly into its three main business groups: Imaging and Printing Group, Personal Systems Group, and Technology Solutions Group. This will give the groups responsibility for tasks like supply chain management, order fulfillment, and some marketing activities, among other duties.

"This realignment will enable us to build on this momentum while enhancing accountability and enabling greater focus and customization of operations based on the needs of our customer segments," H-P CEO Mark Hurd said on Tuesday.

Investors have responded well to Hurd's tenure as CEO. The stock ended 2005 at 28.63. In trading yesterday, H-P closed at 33.74, but gave back 3 cents in after hours trading. A positive response to Hurd's realignment plans could help move H-P past its 52-week high of 34.52.

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Tags: HPQ, SUNW

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About the Author:
David Utter is a staff writer for InternetFinancialNews and WebProNews covering technology and business.


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