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HP Sharpens the Axe

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PC maker plans to cut 24,600 jobs.

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On Monday after the close, PC maker Hewlett-Packard (HPQ) announced some job cuts -big ones. In the next 3 years, it plans to axe about 24,600 positions, or roughly 7.5% of its staff.The move seems like a logical step, particularly given the company's purchase of Texas-based tech services provider EDS in August. CEO Mark Hurd plans to maximize the acquisition, to that end, the company "has identified synergies in corporate overhead functions, such as real estate, IT and procurement."

To be clear, however, I don't see this as a total boon - and not only for the roughly 24,600 folks who'll be losing their jobs. The company will take a fourth-quarter charge of $1.7 billion for the restructuring – not exactly small potatoes.

Second, while the cuts sound like they'll ultimately save a lot of dough, will that be enough? If the economy remains sluggish, will HP need to resort to more job cuts (and potentially more charges) to pick up the slack? In this environment, I think that's a legitimate question.

Third, while I think it's good that the company is looking to save shareholders money, I think it picked a lousy day to make the announcement. With the market off roughly 500 points, I don't think many people were paying attention, as they would have had this news come on a more "normal" day.

To be fair, on the plus side, at least one insider is impressed with the HP's potential: Lawrence Babbio, a director, bought 20,000 shares in late August.

Hewlett Packard closed at $45.33, down $1.64 or 3.49%. The shares were up $0.37 in after-hours action.

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No positions in stocks mentioned.

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