"We Have to Reward the Job Creators" or Meg Whitman cuts 30,000 jobs

The right-wing supply-siders notion (let's not elevate the idea by calling it a theory; it's really mythology and voodoo) that we must not tax CEO too heavily because they are the engine that drives job growth in our economy could hardly be debunked more fervidly than by Meg Whitman announcing that HP will be making its supply side contribution by lobbing off that heads of 30,000 employees. By golly, bet ol' Meg gets herself a big fat bonus for that move. A bonus that will be shielded by tax laws so she only has to be 15% capital gains. Is this what Mitt Romney means by "creative destruction?" I know the meaning of "destruction" in this context. Could someone please explain to me exactly which part of this action is "creative?"

Oh, well, at least Meg is sparing jobs in China.

http://www.nytimes.com/2012/05/18/technology/hewlett-packard-plans-job-cutbacks.html?smid=pl-share

Hewlett-Packard to Cut 30,000 Jobs

By QUENTIN HARDY

Published: May 17, 2012

SAN FRANCISCO — Hewlett-Packard’s chief executive, Meg Whitman, plans to cut 30,000 or more jobs next week, according to officials familiar with the plan. Her goal, they said Thursday, is to spend the money she saves on increasing the efficiency of the company’s sales force and on creating new products.

Tony Avelar/Bloomberg News

Meg Whitman, Hewlett-Packard’s chief executive since September, is said to be focused on efficiency and new products.

The executives, who spoke on the condition of anonymity because they were not authorized to speak for the company, said that H.P. would seek layoffs and voluntary retirements from across the company. The total could be as much as 10 percent of H.P.’s 324,000-person work force. China, which is one of H.P.’s highest growth areas, will probably be spared, as will its research and development efforts.

Ms. Whitman, who became H.P.’s chief executive last September, “is trying to build a new company,” one senior executive said of the job cuts. “You can count this as a part of that.” The final plan is expected to be announced on Wednesday, when H.P. announces earnings for its second fiscal quarter.

Considered a slow-moving giant in the tech industry, H.P. had revenue of $127 billion in fiscal 2011, but net earnings of just $7.1 billion. While it has a leading position in the sales of low-margin personal computers, H.P. has been late or unsuccessful in many recent tech trends like providing cloud computing services for big companies and smartphones and tablet computers.

Ms. Whitman’s new H.P. seems unlikely to abandon any of its major businesses, which besides PCs and printers includes selling computer servers and data storage systems, consulting, and providing low-end services like managing call centers. Ms. Whitman has said that owning so many large businesses enables H.P. to acquire components cheaply through one of the largest supply chains in high technology, and to provide a one-stop shop for corporate tech. Critics charge it encumbers H.P., particularly at a time of rapid change.

Some of H.P.’s problems stem from executive turmoil. Ms. Whitman’s predecessor, Léo Apotheker, served less than a year, during which time H.P. lost about 43 percent of its share price, or more than $32 billion in market capitalization.

An expensive acquisition, unsuccessful products like a tablet computer and confused messages led to his dismissal. But blame also went to his predecessor, Mark V. Hurd. He resigned in August 2010 amid charges of improper relations with a female contractor, though he had won plaudits on Wall Street for his no-nonsense cost-cutting. Many at H.P. now say those cuts left the company with serious operational deficiencies.

Ms. Whitman came to the helm promising to return money to shareholders, and then set H.P. on a course for growth. To date, she has raised H.P.’s stock dividend, and in March announced a corporate reorganization intended to consolidate operational efficiency, for example by merging the PC and printer businesses.

Ms. Whitman, who through a spokesman declined to be interviewed, plans to put money into sales technology for things like fast product quotes, customer tracking and servicing, and bill paying. The hope is that the money gained by job cuts will be used for an efficient, better-trained sales force that in turn can generate more cash.

The company’s long-term success depends on the creation of new products. H.P. recently announced a series of lightweight laptops, called ultrabooks, which compete against similar machines from Apple.

The company also hopes to showcase a cloud-computing data center using its newest servers, which use less power. Much of this market, however, is shifting to extremely low-cost commodity services produced in Taiwan and sold to companies like Amazon and Google by the rack. Both H.P. and Dell, which also hopes to stock big corporate data centers, have suffered in the onslaught.

At one time H.P. also had a vaunted reputation for advanced research at its H.P. Labs division, which underwent such drastic cuts under Mr. Hurd that, according to one insider, scientists were relying on pirated software to run their computers. Prith Banerjee, named head of H.P. Labs by Mr. Hurd, left the company in April. A permanent successor has not been named.

This article has been revised to reflect the following correction:
Correction: May 18, 2012

An earlier version of this article misspelled the name of a former head of H.P. Labs. He is Prith Banerjee, not Banarjee.