http://www.channelregister.co.uk/2009/09/25/hp_f2010_forecasts/

How you might ask are they doing so well in the midst of economic downturn you might ask? Well it’s simple they cut their employee’s salaries, particularly from the EDS side. Now for all I know these employee’s salaries were bloated and needed pruning in any case, but I am just saying that if you are going to brag about how your profits are increasing maybe it should be from increased sales or better innovation or something like that.

Just saying…

http://www.theregister.co.uk/2009/02/19/hp_pay_cuts/

However I just wanted to add my two cents to this story. I think bad quarterly earning reports are to be expected for most hardware vendors at this point. The truth is that HP really needs to diversify their business a bit into the service industry.  From what I understand the industry magic number is 30/70. Thirty percent service revenue and 70 percent sales. Now obviously HP understands this and that’s why they bought EDS, however rather than cutting employee pay which will pretty much guarantee they will loose some of their best people, they should really focus on some heavy lay-offs on the EDS side and then amalgamate the business.