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Tech giant Hewlett-Packard Co. plans to cut 27,000 employees after revealing that third-quarter results will be lower than expected.

The company outlined plans after the close of the stock market for a “multi-year productivity initiative designed to simplify business processes, advance innovation and deliver better results for customers, employees and shareholders.”

The world’s largest computer maker, based in Palo Alto, Calif., had 349,600 employees as of October 31, 2011.

The announcement was expected by the media and analysts after unconfirmed reports of layoffs last week. HP said it expects “approximately 27,000 employees to exit the company, or 8.0 percent of its workforce as of Oct. 31, 2011, by the end of fiscal year 2014.” The total number of employees affected will be lower because employees are being offered an early retirement plan. Since replacing former chief executive Leo Apothekar in September, HP CEO Meg Whitman has announced declining computer sales amid sharp competition from Apple Inc. and other electronics makers.

“These initiatives build upon our recent organizational realignment, and will further streamline our operations, improve our processes, and remove complexity from our business,” Whitman said in a statement. “While some of these actions are difficult because they involve the loss of jobs, they are necessary to improve execution and to fund the long term health of the company. We are setting HP on a path to extend our global leadership and deliver the greatest value to customers and shareholders.”
Hewlett-Packard stock has dropped 18 percent this year. Its shares fell 3.2 percent today to a closing price of $21.08.

The computer company reported sales fell 3 percent in its second quarter, which ended in April, to $30.7 billion.

A flurry of questions about that fumbled Facebook IPO as the share price continues to tumble. Did Facebook executives urge bankers to boost the number of shares to be sold to the public? What did big banks tell select investors about negative prospects for revenue? To what extent were other investors kept in the dark?

Securities and Exchange Commission Chair Mary Shapiro says her agency will look into “issues” involving the IPO. Wall Street’s self regulator, the Financial Industry Regulatory Authority (FINRA) also plans to look into communications by Morgan Stanley to insiders. The Wall Street Journal reports that less than three days before last Friday’s IPO, Facebook’s Chief Financial Officer David Ebersman decided to boost the number of shares offered to investors by 25 percent. That decision may have played a role in drop in value for Facebook shares.

Prepaid cards may face new federal regulations. The Consumer Financial Protection Bureau has taken the first step this morning, asking for comments on how to make sure prepaid cards are safe and come with transparent terms. Bureau Director Richard Cordray says the cards have fewer protections than bank accounts and debit cards. Banks have been criticized for the expensive fees that come with prepaid cards.

Samsung has received a huge amount of pre-orders for the Galaxy S3 smart phone. British media reports say Samsung has already received nine million pre-orders before launch, compared to Apple’s iPhone 4S’s four million units sold in the first three days. In The UK, the big consumer electronics retailer Carphone Warehouse says the S3 is the most popular phone of the year so far. The new phone goes on sale within days.

Doubts about Europe are driving global stock markets lower. Leaders of the 27 European Union countries will meet in Brussels today for a summit to deal with economic and debt problems. There are no signs of consensus about how to stop Greece from skidding into a chaotic bankruptcy

Richard Davies Business Correspondent ABC NEWS Radio twitter.com/daviesabc (212) 456-5100

Forget Facebook. The stock market still belongs to Apple, the world’s most valuable company. Apple shares rose nearly 6 percent yesterday as stocks rallied after weeks of losses because of the debt crisis in Europe. Apple’s bounce was the firm’s second-largest gain this year, as analysts said they expect iPhone business to continue to do well. The Standard and Poor’s 500 had its best day in a month and the Nasdaq index had its strongest gain this year.

All this came despite an 11 percent drop for Facebook shares on its second day of trading after the IPO. Facebook is facing criticism for issuing too many shares at too high a price. “If they had issued 5 percent of Facebook shares instead of 15 percent, I think the stock would be at $45 right now and everyone would be happy,” says analyst Michael Pachter of Wedbush Securities. The social networking firm is now under a harsh new spotlight after going public.

A new warning about the eurozone, responsible for so much investor angst in recent weeks. The Organization for Economic Cooperation and Development warned today the eurozone risks falling into a “severe recession.”  The OECD is calling on Europe’s central bank to act fast to stop the slowdown spilling into the global economy. The report forecasts a longer and deeper contraction in the eurozone than predicted in November, with the eurozone economy expected to shrink in 2012, and only manage a feeble recovery in 2013.

Dalian Wanda Group is not exactly a household name, but it’s on the verge of becoming a high stakes player in Hollywood. The Chinese real estate and manufacturing firm says it will spend $2.6 billion to buy AMC Entertainment Holdings – the second-largest US cinema chain. The Wall Street Journal says “the deal would create one of the world’s largest cinema owners and mark the largest acquisition of a US corporation by a Chinese buyer on record.”

The head of the Commodity Futures Trading Commission says an investigation has begun into JP Morgan’s big trading loss. Chairman Gary Gensler says the probe is “related to credit derivatives products as traded by the chief investment officer of JPMorgan Chase.” Under the 2010 Dodd-Frank law, the CFTC gained powers to monitor trading in indexes of derivatives.

Richard Davies Business Correspondent ABC NEWS Radio twitter.com/daviesabc

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Facebook shares plunged 11 percent to $34.03 in their first full day of trading Monday after the social network’s blockbuster IPO last week.

Facebook stock closed at $38.23 on Friday, only slightly above its IPO price of $38 a share set on Thursday night.

“Facebook is getting slammed as investors who hoped for a momentous run instead take the disappointing first day performance as a cue to flee the stock. The price action is also more telling of what likely would have taken place Friday afternoon if Morgan Stanley hadn’t been propping up its shares above the offering price,” said  Jim Krapfel, IPO analyst with investment firm Morningstar. “There was some thought that Morgan Stanley would continue to prop up shares today but clearly the demand was too overwhelming to keep shares from falling. The weak action clearly shows that some of the speculative froth in technology IPOs has abated, welcome news in our view.”

The IPO had some technical glitches on NASDAQ Friday morning, delaying its trading and confusing some investors who did not receive confirmation of their trades until hours later.

NASDAQ’s CEO Robert Greifeld said the exchange is “humbly embarrassed” by the situation, saying Facebook’s IPO “was not our finest hour.”  The Financial Times reported that investors may seek millions of dollars from the exchange to cover losses tied to the glitches.

A Facebook fiasco for Nasdaq. The chief executive of the Nasdaq stock market admits he was “embarrassed” by what happened on Friday when trading glitches led to doubts about the market’s ability to handle hot IPOs. Nasdaq not only delayed the start of trading in Facebook by a half hour, but there were technical problems throughout the day.

The Financial Times says the exchange is “in talks with regulators over potentially millions of dollars of customer claims.”  Technical problems left investors with orders that were improperly processed. The cause was said to be a malfunction in the trading system that processes order cancellations. Friday’s session saw about 570 million Facebook shares changing hands, the largest ever for an IPO. Nasdaq officials insist the trading problems didn’t have any impact on Facebook’s stock price.

Germany’s hard-line Chancellor Angela Merkel is coming under new pressure to give ground in Europe’s austerity vs. growth debate. The G8 economic summit meeting ended over the weekend with a message that says growth is a priority. Germany has resisted calls to provide more European backing for banks and government bonds. Signs of a slow-motion bank run in several of the weaker eurozone economies are a big headache for the region’s leaders. More crisis meetings are being held this week.

Struggling Internet firm Yahoo has grabbed a lifeline. The Chinese e-commerce group Alibaba has agreed to buy back half of Yahoo’s stake in the company for more than $7 billion. The deal will enable Yahoo to return cash to unhappy shareholders who have been angered by the sharp drop in their shares.

New clues on the strength – or weakness – of the US recovery come this week with the release of two new reports on homes sales and a survey on durable goods orders.

Richard Davies Business Correspondent ABC NEWS Radio

(Image credit: Mark Lennihan/AP Photo)

Facebook announced today that its initial public offering of common stock will be priced at $38 a share, valuing the company at $104 billion, the largest IPO for a U.S. tech company, raising $16 billion.

As media and investor interest in Facebook’s IPO has grown over the past weeks, the company priced its IPO at the highest end of its earlier estimates. On Tuesday, Facebook raised its IPO price range to $34 to $38 a share, from $28 to $35.

To satiate the growing investor appetite for shares of the social media company, on Wednesday Facebook increased the number of shares to be sold at the market debut by 25 percent. Trading is expected to open at 11 a.m. Friday on the Nasdaq.

The company is offering 421.2 million shares of common A stock, which includes 180 million new shares that will be sold by the company and 241.2 million shares sold by existing shareholders  such as early investors and Facebook’s founders.

Facebook’s investment bank lead underwriter, Morgan Stanley, ultimately determines who gets shares of the company before shares are sold to the larger public on Friday, said Jim Krapfel, IPO analyst with investment firm Morningstar. All of the 421 million shares will be sold tonight at the offering price to those investors who met the minimum buy-in requirements, which was millions of dollars for institutional investors.

“The higher your account size and the more business you do with the company, or if your track record indicates you purchased technology IPOs in the past,  you’re more likely to receive shares and are likely to get a higher allocation, but there’s no guarantee,” Krapfel said.

Investor consensus predicts the stock will trade higher tomorrow and close up, but to what extent is unknown, said Krapfel. Morningstar has valued the company at $32 a share.

“It wouldn’t be surprising to see the stock trade up into the 50s intraday and into the close,” he said.

(image credit: Jason Kempin/Getty Images)

Eduardo Saverin, a co-founder of Facebook and soon-to-be IPO multi-billionaire, defended relinquishing his U.S. citizenship, which led lawmakers to announce the Ex-Patriot Act this morning, saying he “will pay hundreds of millions of dollars in taxes” to the U.S.

“My decision to expatriate was based solely on my interest in working and living in Singapore, where I have been since 2009,” Saverin, 30, said in a statement released to ABC News. “I am obligated to and will pay hundreds of millions of dollars in taxes to the United States government. I have paid and will continue to pay any taxes due on everything I earned while a U.S. citizen.”

Saverin, who helped Mark Zuckerberg develop the social network as Harvard students, is expected to save millions of dollars by not paying capital gains taxes on his shares of Facebook, which is expected to have the largest technology IPO ever on Friday.

His stake in the company is estimated to be worth over $3 billion of Facebook once the company goes public on Friday.

Last week, reports revealed Saverin filed in September 2011 to give up his citizenship which became official in September, before Facebook announced its plans in February this year.

“It is unfortunate that my personal choice has led to a public debate, based not on the facts, but entirely on speculation and misinformation,” he said in the statement.

Saverin paid a standard “exit” tax, which included approximately 15 percent of the pre-IPO value of his shares. Saverin is likely saving millions of dollars because he will not pay capital gains taxes while he lives in Singapore.

“As a native of Brazil who immigrated to the United States, I am very grateful to the U.S. for everything it has given me,” Saverin said. “In 2004, I invested my life’s savings into a start-up company that initially was run out of a college dorm room. Since then the company has expanded dramatically, has created thousands of jobs in the United States and elsewhere, and spawned countless new companies across the United States and other countries.”

Sen. Chuck Schumer, D-N.Y., said Sen. Bob Casey, D-Pa., have called Saverin’s move an “outrage.” Their proposed legislation calls for re-imposing a 30 percent tax on capital gains on expatriates like Saverin who take up residence in a foreign country.

Last year 1,700 people renounced their U.S. citizenship.

“I will continue to invest in U.S. businesses and start-ups, and believe and hope that those investments will create many new jobs in the U.S. and globally,” Saverin said. “I also hope that these investments will create opportunities for many other individuals to start companies and benefit society.”

Ben Mezrich, author of “The Accidental Billionaires: The Founding of Facebook,” defended Saverin. Mezrich, who interviewed Saverin for his book which was adapted into the film, “The Social Network,” said saving money was likely a factor for his repatriation, but not the entire reason.

“To be fair, Eduardo wasn’t born in the U.S. and has really lived internationally for most of his life,” Mezrich said. “He will save some money on taxes, and especially on estate taxes down the line, so I’m sure that’s a factor, but he probably made the decision because he sees himself as an international businessman.”

ABC News’ Sunlen Miller and Lauren Pearle contributed to this report.

MOSCOW – Looking to update your summer wardrobe? The makers of the AK-47 assault rifle may soon have something in your size.

The company which produces one of the world’s most popular automatic weapons is in talks with the family of the gun’s namesake, Mikhail Kalashnikov, to obtain the rights to the Kalashnikov brand. According to Russian news reports the company says that brand may be worth $10 billion, which they say is on par with Apple, and could grow.

The company hopes that the AK-47′s reputation as a reliable, precise product will help it sell high end products under the same name and perhaps even high end clothing. There is already a Kalashnikov brand vodka and in 2006 AutoVAZ, the Russian carmaker, attempted to produce a Kalashnikov branded SUV.

A company spokesman compared the brand to that of Baretta, another gunmaker, which has successfully marketed its own line of hunting and recreation sportswear.

Analysts cited in one report say Kalashnikov branded clothing may have a hard time selling to a broad spectrum of shoppers, but may have some appeal for outdoorsmen.

The Kalashnikov is the world’s most common small arms. Over 70 million have been produced with various modifications since it was first introduced in 1947. It is a standard issue weapon in dozens of armies, but is more famous as the cheap and readily available weapon of choice for terror and rebel groups around the world.

This is how Facebook describes a “hackathon”: “Hackathons are a big tradition at Facebook. They serve as the foundation for some great (and not so great) ideas. It gives our employees the opportunity to try out new ideas and collaborate with other people in a fun environment.”

Basically the company’s employees spend the night working on their ideas to see where they go.  Everyone at the company is invited.

This is something they have done in the past, but this will be their last such endeavor as a private company.

The next morning Mark Zuckerberg will ring a bell that will make many of these employees millionaires and billionaires.

(Image credit: Mark Lennihan/AP Photo)

JPMorgan Chase now faces two new lawsuits from shareholders angry over the bank’s $2 billion trading loss.  The suits, filed in federal court in New York, allege JPMorgan misled investors about the bets that went bad.

“Defendants misrepresented the losses and risk of loss to the Company arising from massive bets on derivative contracts,” plaintiff Saratoga Advantage Trust said in court papers.  “These derivative bets went horribly wrong.”

Chief executive Jamie Dimon, whose pay package was approved by shareholders on Tuesday, has said the bank made “egregious” and “self-inflicted” mistakes, words that may come back to haunt him in court.

“We believe that he made false and misleading statements and omissions quite frankly,” Bruce Ventimiglia, CEO of Saratoga Advantage Trust, one of the firms that filed suit, told ABC News.

The lawsuit names Dimon and Chief Financial Officer Douglas Braunstein.

Dimon and Braunstein “knew, or could not reasonably have been unaware of, the magnitude of losses being incurred by JPMorgan,” court records said.

When JPMorgan disclosed the loss last week the bank said it resulted from a failed hedging strategy meant to insulate its portfolio from losses.  Ventimiglia does not buy the explanation.

“They have mislabeled what they were doing.  They describe what they were doing as hedging strategies.  We think they were outright bets,” he said.

JPMorgan Chase declined to comment on the lawsuits.  The bank has also declined to give specifics about the trades, but Saratoga Advantage Trust believes “these wagers may have reached close to $100 billion in size.”

“These types of derivatives trades are at the center of the 2008 financial crisis,” Ventimiglia said.  “The proper disclosure of what these banks are doing is critical to investors.”

The Federal Bureau of Investigation has opened a criminal probe into the JPMorgan trades.