TECHNOLOGY

HEWLETT-PACKARD WILL CUT 14,500 WORKERS, SAVE $900 MILLION

After weeks of speculation of a massive restructuring to come, Hewlett-Packard Co. announced yesterday it would reduce its work force by 10%, or 14,500 people.

The move, which H-P said is designed to create a “simpler and nimbler” company, was widely expected by Wall Street analysts, and sends the message that the company is following through on plans already in place.

“The strategy is really the same as it was when Carly [Fiorina] was in charge,” an analyst at Gartner, Carl Claunch, said. “The approach to the market and its portfolio of products are the same, with continuing focus on how to execute better.”

Announced earlier yesterday, the headcount reductions are expected to save HP $900 million to $1.05 billion in fiscal 2006 and $1.9 billion in fiscal 2007. H-P will take pretax charges of $1.1 billion over the next six quarters. Chief Executive Mark Hurd, who was brought on after the board ousted Ms. Fiorina in February, had been expected to restructure the company, with some analysts calling for layoffs of as many as 20,000 workers.

– Dow Jones Newswires

WALL STREET

PENSION FUND SUES MORGAN STANLEY OVER SEVERANCE PAYOUTS

A pension fund is suing former Morgan Stanley Chief Executive Philip Purcell and the board of the investment bank, alleging mismanagement that includes big severance payments to Mr. Purcell and other executives.

The suit names among others the inside general counsel for Morgan and its outside counsel, according to William Lerach, a partner at Lerach Coughlin Stoia Geller Rudman & Robbins LLP, which is representing the pension fund.

The Central Laborers Pension Fund, which owns approximately 7,000 shares of Morgan Stanley stock, according to Mr. Lerach, filed suit yesterday in U.S. District Court in the southern district of New York. It said in its complaint that the lawsuit “arises out of years of gross mismanagement, abuse of control and fraud in the purchase and sale of the stock of Morgan Stanley and the use of false and misleading proxy statements by its Chairman/CEO Philip J. Purcell, several members of Purcell’s management team, and Purcell’s hand-picked, crony-laden board of directors. “The suit is also seeking damages arising from the recent $1.4 billion verdict against Morgan Stanley in a case brought by financier Ron Perelman. The pension fund’s suit claims Morgan Stanley should have settled with Mr. Perelman rather than having gone to full trial. It also criticizes severance payment to Mr. Purcell and former Morgan Stanley copresident Stephen Crawford.

– Dow Jones Newswires

GREENSPAN TESTIMONY MAY SEND RIPPLES THROUGH TREASURY MARKET

Federal Reserve Chairman Alan Greenspan’s semi-annual testimony to lawmakers should send ripples through what has been a relatively placid Treasury market, but those looking for the bigger splash typically associated with these appearances could be disappointed.

Whether it’s a credit to the Fed’s communication skills or a round of economic data that begged for higher yields, the bond market is already more closely aligned with the Fed’s thinking on monetary policy than it was just a month ago.

The market got a sneak peek on Monday into the chairman’s thinking earlier this month. In a letter dated July 11, Mr. Greenspan told Rep. Jim Saxton, a Republican of New Jersey, that the rise of crude-oil prices this year may reduce American economic growth by 0.75 of a percentage point, but said the economy “seems to be coping pretty well” nevertheless. Treasurys weakened after the letter was released, with the yield on the 10-year note rising as high as 4.24% in Tuesday’s trade, before investors sniffed a buying opportunity and pushed yields lower again. The see-sawing of yields before a semi-annual address is typical, but so is the fire storm the actual testimony has been known to ignite. Mr. Greenspan will testify to the House Financial Services Committee today and the Senate Banking Committee tomorrow.

– Dow Jones Newswires