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Hewlett-Packard said on Tuesday it would cut about 10 per cent of its workforce as part of a plan to restructure operations at the world's largest printer maker and second-largest PC maker to better compete with rivals such as Dell and IBM.

Some 14,500 of HP’s 151,000 worldwide staff will lose their jobs during the next six quarters.

The job cuts, together with changes to the company’s retirement scheme which will freeze pension plans for some existing staff, will save $1.9bn per year from 2007. HP sees savings of between $900m and $1.05bn in its 2006 financial year.

Mark Hurd, appointed chief executive on April 1 after his predecessor Carly Fiorina lost the confidence of HP’s board, has spent almost four months studying the computer and printer maker's challenges and devising a plan to wring growth from the group's diverse collection of businesses.

Most job losses will come from areas such as IT, human resources and finance. Some positions will also be axed from other business units, and HP will offer some “longer-serving” US employees voluntary redundancies. Sales staff job losses would be “minimal”, the company said.

The group will book a $1.1bn restructuring charge over the next six quarters.

The restructure will also involve the dissolution of HP’s Customer Solutions Group (CSG), a standalone business which sells to enterprise, small-to-medium and government customers. Those sales will be taken up by three product groups, which cover technology, imaging and printing, and personal systems.

The “grey old lady of Silicon Valley” is still trying to find its footing in the wake of its $19bn acquisition of Compaq Computer in 2002. The controversial deal was supposed to give HP the breadth and depth it needed to compete against IBM's high-end services business and Dell's low-cost PC operations.

HP's financial results have been mixed, as its corporate computing unit and PC business have continued to struggle while its key printer division has been under increasing pressure from competitors.

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