Tech troubles: HP cuts 27,000 jobs while Facebook to be sued over IPO
Thursday, May 24, 2012/
Technology giant HP will cut 27,000 jobs as part of a restructuring program that is likely to affect Australia while Facebook, its underwriters and the Nasdaq are all facing legal action resulting from the social network’s initial public offering last week.
HP said it plans to cut around 8% of its global workforce by 2014 in a major restructuring effort for the world’s biggest personal computer maker.
Stephanie Aye, spokesperson for HP in Australia, told SmartCompany HP has not yet announced specific plans with regards to locations, but it was likely the job cuts would impact HP’s Australian operations.
“We do expect the workforce reduction to impact just about every business and region,” says Aye.
“Beyond this, we unfortunately don’t have any additional information to share at the moment.”
Aye says HP did not break down its workforce by country so she was unable to say how many people HP employs in Australia, but it employs approximately 349,600 people worldwide.
HP expects the restructuring will generate annualised savings in the range of US$3-$3.5 billion exiting fiscal year 2014.
The savings will mostly be reinvested in the company and boost investment in areas such as cloud computing, big data and security, and other segments “that offer attractive growth potential.”
Meg Whitman, HP president and chief executive officer, said in a statement released yesterday that the restructuring would “further streamline” operations, improve processes and remove complexity.
“While some of these actions are difficult because they involve the loss of jobs, they are necessary to improve execution and to fund the long-term health of the company,” she said.
“We are setting HP on a path to extend our global leadership and deliver the greatest value to customers and shareholders.”
Meanwhile, Facebook is subject to class actions that allege that the social network, Morgan Stanley, Goldman Sachs and other big Wall Street banks that distributed the shares, withheld crucial information from smaller investors that they shared with big institutional clients in Facebook’s US$16 billion IPO last week.
Fairfax reports that law firm Glancy Binkow & Goldberg claims they “failed to disclose that during the IPO roadshow, the lead underwriters… cut their earnings forecasts and that news of the estimate cut was passed on only to a handful of large investor clients, not to the public.”
In addition the Massachusetts state government issued a subpoena for the lead underwriter, Morgan Stanley, over how it shared information ahead of the IPO.
One investor has sued the Nasdaq exchange for losses resulting from the computer glitches that stalled or prevented the execution of orders on millions of shares after the shares hit the market Friday.
After Facebook went public on Friday its shares plunged 18% over the first three trading sessions, hit by heavy institutional selling that was exacerbated by glitches in Nasdaq’s system that disrupted orders for millions of shares.
“We believe the lawsuit is without merit and will defend ourselves vigorously,” a Facebook spokesperson said.
Facebook may also face a regulatory inquiry into the problems surrounding the IPO.
The Australian Financial Review reports that Mary Schapiro, the head of the SEC, has also raised the prospect of an investigation into the IPO by the regulator.
“There is a lot of reason to have confidence in our markets and the integrity of how they operate, but there are issues we need to look at specifically with regard to Facebook,” said Schapiro.