After major tech companies announced layoffs, HP Inc is set to bring down its workforce by slashing up to 6,000 jobs over the next three years amid declining demand for personal computers (PC) that have cut into profits.
The company noted that the earnings, excluding some items, will be $3.20 to $3.60 a share in the fiscal year ending October 2023, reported news agency Bloomberg. The forecast takes into account a 10 per cent decline in computer sales in the fiscal year, chief executive officer Enrique Lores said in an interview. The company expects a challenging market environment, the CEO said.
In its effort to cut costs, HP will cut as much as 10 per cent of its 61,000-employee global workforce over the next three years and reduce its real estate footprint, Lores said.
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Going ahead, it will spend an estimated $1 billion in restructuring charges, with about 60 per cent in fiscal year 2023. By the end of fiscal 2025, the plan should save as $1.4 billion a year, HP said in the statement, reported news agency Bloomberg.
What’s impacting HP earnings?
The technology firm that earns mostly by selling computers has been facing a decline in PC demand. The impact started with lower-end consumer products but gradually spread as companies reduce their workforces and curb technology investment, Lores said.
The global PC shipments fell almost 20 per cent in the third quarter – seen as the biggest decline since it began tracking the metric in the mid-1990s, noted analyst Gartner Inc.
HP, which also manufactures printers, will focus on new lines of business such as subscription services. The Palo Alto, California-based company already offers ink subscriptions, and it will now explore plans for other products like printer paper and computers, Lores said.
Fiscal fourth-quarter revenue declined 11 per cent to $14.8 billion, which was slightly better than analysts’ expectations. Profit, excluding some items, was 85 cents a share, also topping estimates.
Sales in the Personal Systems Group, which includes the computer business, fell 13 per cent to $10.3 billion, led by a 25 per cent drop in consumer revenue. Sales in the Printing unit dropped 7 per cent to $4.5 billion, which beat estimates.
Several companies including Meta Platforms and Amazon began cutting jobs while Twitter Inc sacking more than half its staff of 7,500 employees. Hard-drive maker Seagate Technology Holdings Plc. said it would cut about 3,000 jobs while Cisco Systems Inc. last week unveiled a plan to reduce an unspecified number of jobs and close offices.
Dell Technologies, which has 55 per cent of its revenue generating from PC sales, on Monday also predicted a lackluster outlook for the current quarter and said some customers have “paused purchases” in the near term.