Hmm I guess this is one of the reasons why they cut 14,500 jobs. Who knew the HP Way would cost so much money:
Even so, the company had to contribute $1.2 billion to its pension and post-retirement benefit plans in 2003 and $613 million in 2004. In the company's last annual report, HP said it expected to spend $910 million meeting those obligations in 2005.
The savings looks pretty good but they are still trailing their rivals pretty badly. IBM is beating them in servers and consulting and Dell is beating them in PC sales. IBM is being hit hard by paying out the pensions also though.
Even with the changes, IBM expects to spend up to $1.1 billion this year to shore up its defined-benefit pension plans for international workers, and already contributed $1.7 billion to its U.S. fund in January. IBM's chief financial officer, Mark Loughridge, said Monday that pension costs continue to rise.
That's $2 billion just to support retirees. Good thing IBM is growing their business pretty well so they can absorb this cost.
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