2012 Announced Layoffs: 27,000
Stock Performance Since Announcement: -19%
Back in May 2012, Hewlett-Packard (NYSE:HPQ) dropped the bomb, announcing it would eliminate 27,000 jobs, then adding 2,000 to the cut list for a total of 29,000 jobs expected to be slashed by the end of FY2014.
The goal: Snip more than $3 billion in costs.
HPQ’s stock pretty much tanked through the remainder of the year, but has recently gained some momentum on rumors of a possible investment by Carl Icahn. He’s a smart guy … but you’d think he’d have noticed the year’s worth of steady revenue decline at HP. Meanwhile, the past couple quarters have been hideous on the bottom line thanks to restructuring charges and lousy investments.
With interest in traditional PCs waning every year and virtually no mobile presence to speak of, significant growth at Hewlett-Packard seems unlikely. Cutting expenses makes sense, especially in a bloated company with seemingly no direction. But Hewlett-Packard still needs direction — and a legitimate plan for revenue growth.
2012 Announced Layoffs: 4,700
Stock Performance Since Announcement: -48%
Speaking of direction …
JCPenney (NYSE:JCP) has been a headliner all year, with CEO Ron Johnson trying to bring the once-popular retailer back to glory. Unfortunately, the result still remains a tangled mess.
JCP’s layoffs started with the shop floor in January and then the executive suite in June. Johnson canned almost 5,000 workers first, but later lost one of his newly hired subordinates.
The right-sizing effort is aimed at helping to cut costs while Johnson plows millions in hopes of transforming the stores. So far, he’s 1-for-2. Revenues have been abysmal, with the past three quarters showing contractions of more than 20% each! And it looks like the holiday season didn’t help things, either. Analysts say same-store sales might have declined as much as 30%.
Perhaps the only sign of “life” was a slightly narrower overall loss in the third quarter, but that’s a pretty tarnished silver lining. I doubt fewer clerks will be what saves JCP.
2012 Announced Layoffs: 11,000
Stock Performance Since Announcement: +12%
Citigroup (NYSE:C) announced in December that it was cutting 11,000 jobs. Though perhaps the biggest pink slip came earlier in the year — to CEO Vikrim Pandit, who apparently didn’t move quickly enough for the board. I suspect there is more to the story with Pandit, but that same board put noted cost-cutter Michael Corbat in place, and layoffs are on the way.
The layoffs hit what was an important core at Citi: Global consumer banking, as it will reduce operations in Pakistan, Romania, Uruguay and Paraguay in addition to closing 84 branches worldwide.
Because the layoffs were announced only a month ago, it’s hard to gauge their effect. But the Street took immediate notice, juicing Citi shares 6% on Dec. 5.
Closing operations and announcing layoffs isn’t going to help increase revenues, however. Citi’s sales have declined for eight straight quarters, including a 29% drop in the most recent period. Meanwhile, how and where Citi expects to eventually grow is unclear.
2012 Announced Layoffs: 8,700
Stock Performance Since Announcement:+7%
CEO Indra Nooyi must have been under some serious pressure to change the landscape at PepsiCo (NYSE:PEP) when she announced an effort back in February to “optimize operating practices and organization structure” — to the tune of 3% of the company’s work force.
Adjusted earnings have slid the past two quarters — restructuring took its bite, but those lower earnings also came alongside two straight quarters of revenue decline.
That said, the second part of the big initiative announced in February — increased ad spending — is really now starting to get going. Pepsi just announced a huge sponsorship deal with Beyonce, as well as a Super Bowl ad rush with Budweiser parent Anheuser-Busch InBev (NYSE:BUD). Those initiatives to thrust itself back into the spotlight aren’t any guarantee of success, but they’re decent ideas. Between that — and PepsiCo’s broad business and well-known-brands — PEP might have the best forward-looking prospects among these job-cutting companies.
American Express Company (NYSE:AXP) has announced that it will lay off 5,400 of its staff. and has announced restructuring costs of $400 million for the fourth quarter of 2012. The news was delivered alongside the company’s earnings results for the last three months of 2012.
Earnings per share for the fourth quarter was $0.56 per share according to the American Express Company (NYSE:AXP) release. The firm had revenue of $8.1 billion, up 5 percent from the same period a year ago. Excluding the restructuring costs, and other charges, the company earned $1.09 in the quarter, that’s 8% higher than last year’s $1.01 per share.
Analysts had been anticipating earnings per share of around $1.12 excluding some items. the company earned $1.09 excluding items in the fourth quarter of 2012, matching its earnings in the third quarter of the year. Revenue was lower, having hit $8.4 billion in the third quarter of 2012.
The company said the layoffs were designed to reduce the company’s cost base going forward and to change the structure of the company in light of changes in the credit card industry. The firm estimated that staffing levels would be lowered by between 4 and 6 percent by the end of 2013. The company currently employs over 63,000 people.
The increase in users accessing and managing their credit cards over the internet has made it necessary to change the way the company handles their customer base. The most affected region of the business is the Global Business Travel sector. The company aid that segment of its business will be completely re-engineered in order to conform more closely to the behavior of its clients.
The company said that most of the $400 million in charges associated with the job cutting plan will be spent in severance pay to those taking redundancy. The job cuts will, according to American Express company (NYSE:AXP) be spread equally between positions in the US and international markets. The company said the lay offs will be concentrated in positions that did not directly generate revenue.
The company seems confident that its cost cutting workforce reductions will not have any detrimental effect on the services it offers. American Express Company (NYSE:AXP) said that the positions it is planning on getting rid of are, in many cases, duplicates. The lay offs will be a matter of increasing efficiency.
Traders seem to have been encouraged by the company’s announcement of lay offs. In after market trading, the firm’s stock has risen by more than 0.5% since the announcement was made less than an hour ago. American Express Company (NYSE:AXP) stock has risen by more than 7% since the start of 2013, in anticipation of this earnings announcement.
Though consensus estimates were not met by the company’s earnings announcement, the announcement of wide corporate restructuring has been enough for traders to put their money behind the company. The company will hold a conference call at 5pm EST to discuss its earnings, and its restructuring, with analysts and investors.
American Express Company (NYSE:AXP) will have to reassure investors that restructuring will go smoothly. If it manages that, its New Year rally may extend well into 2013.