HP plans $1bn cost-cutting campaign

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Hewlett-Packard, the world’s second biggest computer company by revenues, on Wednesday announced plans to reduce the number of its corporate data centres from 85 to six as part of a plan to cut up to $1bn in internal IT costs over the next few years.

The consolidation, which is expected to take three years, is also designed to act as a showcase for HP’s next generation of corporate computing tools as the company attempts to boost sales of servers, storage and IT services to big corporate clients.

“These facilities will serve as a model of the next-generation data centre that HP believes represents the future of enterprise computing,” said Mark Hurd, chief executive.

The six new data centres, in Austin, Atlanta and Houston, would be designed to function 24 hours a day and to be capable of being managed remotely.

HP’s enterprise computer strategy hinges on convincing big companies to replace their existing IT infrastructure with “lights out” data centres, which require fewer employees to operate and suffer fewer service interruptions than existing corporate IT systems.

Randy Mott, HP’s chief information officer, said the restructuring was expected to result in a 25 per cent drop in power and cooling costs, in addition to other savings.

“This effort will enable faster delivery of new technologies, services and information and provide room for growth and improved business continuity,” he said.

Shares in HP on Wednesday rose 3.9 per cent to $32.33, a day after increased sales and higher margins led the computer group to beat Wall Street’s expectations in the second quarter.

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