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Research Unit at HP to Be Cut

The 10% staff reduction at the laboratory is part of the computer maker's plan to shed 14,500 jobs.

July 27, 2005|From Bloomberg News

Hewlett-Packard Co. is eliminating four research groups and about 70 workers from HP Labs, the division responsible for advanced research and technology, as part of the company's 14,500 job cuts announced last week.

HP Labs will lose about 10% of its 700 workers, HP spokesman Dave Berman said Monday. The Palo Alto-based company also eliminated three groups within HP Labs to "flatten" the organization, he said.

Among the projects being cut is a software program headed by Internet pioneer Alan Kay.

HP, the world's largest printer maker, spends almost eight times as much as rival Dell Inc. on research and development.

Analysts such as Sanford C. Bernstein & Co.'s Toni Sacconaghi in New York say Chief Executive Mark Hurd may cut as much as $500 million from its $3.5-billion annual budget by ending "non-core" projects.

"These are projects that, while they're very worthwhile, are not absolutely core to our business," Berman said.

"We need to put our focus on those projects that represent the greatest opportunities for us," Berman said.

HP Labs, which accounts for about 5% of the company's research-and-development spending, will continue to be run by Dick Lampman, Berman said.

HP eliminated the Advanced Software Research Program, run by Kay, who was hired by former CEO Carly Fiorina in 2002; the Cambridge Research Labs, responsible for health-related research, including potential devices for medical professionals; the Consumer Applications and Solutions Lab, whose research tasks will be taken over by other groups; and the Emerging Technologies Lab, which has been working on storage technology, Berman said.

The company is in the process of licensing some of its storage technology to other companies, he said.

Shares of HP rose 6 cents Tuesday to $24.36. The stock is up 23% since March 29, when Hurd was named to replace Fiorina.

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