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More sackings appear certain in the IT industry after Hewlett-Packard and Cisco said that cutbacks are imminent due to a downturn in business. It is not known whether the global cuts will impact Australia however it is tipped that the Cisco consumer business will move to a distributor model after the dumping of the Flip Camera.Yesterday Hewlett Packard cut its forecast for the year by a billion dollars, and CEO Leo Apotheker issued a gloomy secret memo warning executives that tough times are ahead.
Apotheker’s warning closely follows news that networking equipment giant Cisco is estimated to be planning to sack as many as 3000-4000 employees.
In a Q2 financial report rushed out following the leaking of Apotheker’s memo, H-P reported net revenue of $31.6 billion, up 3 percent from Q2 last year, and up just one 1 percent when adjusted for the effects of currency. Revenue was up 2 percent.
The company lowered its 2011 revenue guidance from $130 billion to $129 billion. In February it had forecast $130 billion to $131.5 billion.
In the internal memo obtained by the Bloomberg financial news service, Apotheker told top executives that he’s bracing for “another tough quarter” in the July period and urged his deputies to “watch every penny and minimise all hiring.”
The memo indicated that the company is continuing to come under pressure and that job cuts are now inevitable. Apotheker said the company’s existing headcount plans are “unaffordable, given the pressures on our business”.
“Q3 is going to be another tough quarter, one in which we will be driving hard for revenue and profit,” he wrote. “We have absolutely no room for profitless revenue or any discretionary expenditures.”
Apotheker’s e-mail follows the release in February of a forecast for the second quarter, ended April, that missed analysts’ sales and profit estimates. HP blamed that shortfall on sluggish demand for services and consumer products.
The company has so far failed to get its much ballyhooed new tablet PC and smartphone to market, months after promotional showings. The Q2 report shows a 5 percent drop in revenue at its personal systems group, though imaging and services revenue grew slightly.
