What Will HP's Restructuring Look Like?

And I'm Audie Cornish. And we begin this hour with a few numbers and the story they tell about the troubled tech giant Hewlett-Packard. The company revealed yesterday that its profits dropped 31 percent from the same quarter a year ago. So now HP plans to cut a big number, some 27,000 jobs. How big is that? In broad outline 8 percent of its global workforce. NPR's innovation correspondent Steve Henn joins us now to talk about what this move means for the company that helped create Silicon Valley. Hey there, Steve.

HENN: So then, HP has sort of fallen out of step with where much of the industry is headed. You know, HP is all in all one of the largest computer companies on the planet in terms of revenue, and it's in effect enormous. It has 20 times the revenue of Facebook, close to 100 times the number of employees. Nevertheless its future - meanwhile according to Wall Street analysts and investors - doesn't look that bright. So right now, Wall Street values Hewlett-Packard at half of what it just sold Facebook for.

And the reason is that Hewlett-Packard makes a lot of its money from selling personal computers. And unless you're Apple, personal computers have very, very thin margins. You don't make a lot of money by selling each computer. So right now, HP is attempting to figure out what's straightway for the company, how it can move into the world of computing that seems like it's going to be dominated by mobile phones, tablets and, you know, what people call cloud computing systems.

HENN: Yeah. So they bought Palm, and they created the - they tried to create for the moment this entire mobile phone ecosystem. And afterwards the TouchPad flopped, the previous CEO, Leo Apotheker, abandoned that effort. So as a matter of fact, this restructuring isn't about moving into mobile. It's about moving into computing services in fact aimed at corporations and companies and startups, moving into the cloud.

HENN: So then, HP wants to move into the business where they're as a matter of fact renting businesses that server space and that computing capacity. So if I'm starting the then great app in Silicon Valley to put it more exactly than having to buy my own stuff to power it, I can rent that from HP. Now, there are businesses out there that already do that. Amazon is the biggest one, however HP wants to compete in that space now.

HENN: So then, I think she evidently wants to make a company that's less consumer oriented, that's less dependent on actually highly priced competitive consumer products, like PCs and printers, and more focused on delivering services and solutions to businesses where there are fewer competitors in the field and HP can in point of fact differentiate itself by offering things other people can't and permanently charge a premium for it.

CORNISH: That's NPR research correspondent Steve Henn talking with us about Hewlett-Packard. The company plans to cut 27,000 jobs over the then and there two years.