EDS integration means restructuring for HP

Hewlett-Packard is up for restructuring following the completion of the acquisition of Electronic Data Systems Inc. (EDS) last month. HP intends to implement a restructuring program for the EDS business group that will better align the combined company's overall structure.

The restructuring program will take place over three years and includes a workforce reduction that will streamline the combined company's services businesses. Workforce reduction plans will vary by country, based on local legal requirements and consultation with works councils and employee representatives, as appropriate. Approximately 7.5 percent of the combined company's workforce, or about 24,600 employees, will be affected over the course of the program, with nearly half of the reductions occurring in the United States.

The company said it expects to replace roughly half of these positions over the next three years to "create a global workforce that has the right blend of services delivery capabilities to address the diversity of its markets and customers worldwide."

Once completed, the restructuring program is expected to result in annual cost savings of approximately $1.8 billion. These savings are net of reinvestments in areas including sales coverage, delivery optimization and emerging markets.

HP said it would record a charge of $1.7 billion in Q4 fiscal 2008 relating to the restructuring program, $1.4 billion of which will be recorded as goodwill and $300 million of which will be recorded as a restructuring charge that will be included in HP's financial results.