Enrique Lores, CEO, HP
Scott Mlyn | CNBC
computer manufacturer HP Inc. said Tuesday it plans to cut 4,000 to 6,000 employees over the next three years. Shares rose 1% in extended trading after the announcement.
HP is the latest technology company to announce its intention to lose weight given the economic challenges. Meta, Microsoft and Facebook parent Salesforce are among those that have made similar changes. HP, for its part, is reacting to a deterioration in computer sales. At first, the Covid pandemic caused a PC buying frenzy as people rushed to work and play from home. But the sensational growth did not hold up.
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In a statement, HP said its “Future Ready transformation plan” is expected to result in annualized gross savings of $1.4 billion or more over the next three years, with approximately $1 billion in costs, including the restructuring. Of that $1 billion, $600 million will come in fiscal year 2023, which ends Oct. 31, 2023. The rest will be split equally between fiscal years 2024 and 2025, HP said.
As of October 2021, HP had approximately 51,000 employees. In 2019, HP announced that it would cut between 7,000 and 9,000 employees.
HP said revenue for the fiscal fourth quarter, which ended Oct. 31, fell 0.8% year-over-year to $14.80 billion. Revenue in the personal systems segment, which includes PCs, fell 13% to $10.3 billion, as units fell 21%. Consumer revenues in the segment fell 25%. Printing revenue, at $4.5 billion, fell 7% as units fell 3%.
In the prior quarter, Personal Systems revenue was down 3% and Printing revenue was down 6%.
From a profitability perspective, HP reported that the Personal Systems segment’s operating margin contracted to 4.5% from 6.9% in the prior quarter.
Also on Tuesday, HP announced a pessimistic earnings forecast.
The company provided a range of adjusted earnings for the fiscal first quarter of 70 cents to 80 cents per share, below the consensus of 86 cents among analysts polled by Refinitiv.
For fiscal 2023, HP called for adjusted earnings per share of $3.20 to $3.60, below the Refinitiv consensus of $3.62 per share.
LOOK: HP Inc CEO on company’s planned layoffs and ‘Future Ready transformation plan’