Second-quarter results were set to surface just after we took this issue of the NewsWire to the mails, but we could see HP working hard to keep costs down and take advantage of its rising enterprise business. The company logs the majority of its sales to the consumer markets through its printer and PC businesses, so HP was taking steps all during April to offset that high-expense business by trimming operations wherever it seemed prudent. Advice delivered to analysts during the month indicated that sales would be off from two to four percent from last year’s second quarter, as well as down that much from this year’s first quarter sales. HP was looking at the upcoming Q2 results as the low-water-mark for its year, though it was cautious about stating whether its business had truly touched bottom. “I think a recovery is too strong a word,” said HP CEO Carly Fiorina, “but we're clearly talking about the second quarter being a bottom, and I say that with great caution.”

In the middle of the month the company announced it would be reducing the number of managers in its operations, an event which got understood by the general press to mean that 3,000 more people would be laid off at the company. In actuality the company is trying to broaden the scope of management for all of its managers, in order to reduce the number of them. From these moves will come an overall elimination of the jobs. Managers will be given an option to become HP employees who are not managing people — in some cases no change at all, since some people at HP hold the title of manager but manage no one but themselves. In practice the HP move sometimes will mean a management vacancy doesn’t get filled because of organizational changes, like when the e3000 division didn’t replace its Regional Business Manager for Europe this spring (see story inside our May issue.) Worldwide Marketing Manager for the e3000 division Christine Martino said the company’s staffing adjustment of 1,700 marketing posts didn’t result in any specific reductions in the e3000’s manpower. “We look to do things through attrition and restructuring,” she said. “We were on the easy end of that, and were able to do it in a way that had little or no impact.”

As for the elimination of the 3,000 management titles in the company, HP has been careful to keep that activity away from R&D staff. Jeff Vance, an engineer in the e3000 division, explained the impact of the move from an R&D perspective in a posting to the Internet. “This means that we are supposed to have more people working for each manager,” he said. “This can be accomplished several ways: 1) fire managers and move their people to other managers; 2) hire more individual contributors and have them report to existing managers; 3) promote some managers back to individual contributors (‘promote’ is my opinion). I believe all three options will be used by HP, including hiring engineers.”

“The press release that went out was very specific about those changes being in management,” Martino explained. “In taking a look at our span of control, it doesn’t match well to our competitors’ span of control. The plan is to make sure people aren’t managing one or two people, or managing no one. Cleaning up this is expected to reduce 3,000 jobs. It’s very different than what was done before — it’s not a layoff, or a package program, or any of that. It’s expected in the normal course of increasing span of control and restructuring, 3,000 less people will be managers. It’s a personal decision on everyone’s part.” HP said it expects this reduction to occur all through the early part of the summer, another key date — the start of mandatory vacation days for the entire company. HP has asked employees to take six days off between May 1 and Oct. 31, a move mirrored by competitors like Sun Microsystems, which will be dark the week of July 4th. HP had also delayed all raises through the month of April, and had earlier asked employees to take five vacation days between December and Jan. 31.