Massive Layoffs or Not, HP Remains a Low-Margin Company: A Comparison to Dell and IBM
Hewlett Packard (HPQ) has plans to adapt the personal computer giant to the new mobile and cloud age. But so far, that’s not going well.
Related to that, HP announced plans to lay off another 2,000 employees, bringing total cuts to 29,000.
But employees have done a pretty good job, it would seem from looking at HP’s stats. Based on last fall’s annual filing when the company had 349,600 employees, each of them brought in $363,973 in revenue. How does that compare to rivals? It’s less than at Dell (DELL), whose fiscal year ended last February, its 109,400 employees (including 2,700 temps) brought in $567,376 each.
But it’s more than at IBM (IBM), whose whopping 433,362 employees brought in just $140,116 each.
And yet in terms of profits, IBM is the most successful of the three companies.
Looking at profits per employee, each HP employee brought in $20,157, each Dell employee brought in $32,727, and each IBM employee brought in $36,586.
IBM has five business units: Global Technology Services, Global Business Services, Software, Systems and Technology and Global Financing. Last year those had gross margins of 35%, 29%, 88.5%, 40%, and 50% respectively.
Summed up, IBM sells a lot of consulting and software. That avoids messy manufacturing costs and comes with higher margins. That’s particularly true for software, which last year was 23% of total sales, but IBM stated it expects about half of its profit to come from software by 2015.
So HP employees should be sure to send a resume to IBM.