Enrique Lloris, CEO, HP
Scott Mill | CNBC
computer maker HP Inc. It 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 downsize due to challenging economic conditions. Meta, Microsoft and Facebook subsidiary Salesforce are among those who have made similar changes. HP is responding after the decline in PC sales, which was followed by the spread of the Covid pandemic, as people rushed to buy computers for work and play from the comfort of their homes.
HP said in a statement that its “future-ready transformation plan” should result in annual gross operating rate savings of $1.4 billion or more in the next three years, with about $1 billion in costs including restructuring. Of that $1 billion, $600 million will come in fiscal year 2023, which ends Oct. 31, 2023. HP said the remainder will be split evenly between fiscal years 2024 and 2025.
As of October 2021, HP had approximately 51,000 employees. In 2019, HP announced that it would lay off between 7,000 and 9,000 employees.
HP said revenue in the fourth fiscal quarter, which ended Oct. 31, fell 0.8% year-over-year to $14.80 billion. Revenue in the personal systems segment, which includes computers, fell 13% to $10.3 billion, with units down 21%. Consumer revenue in the segment decreased by 25%. Printing revenue, at $4.5 billion, was down 7%, and units also fell 3%.
In the prior quarter, personal systems revenue decreased 3%, and printing revenue decreased 6%.
From a profitability standpoint, HP reported operating margin for the personal systems segment narrowed to 4.5% from 6.9% in the prior quarter.
HP also reported downbeat earnings guidance on Tuesday.
The company reported a range of adjusted fiscal first-quarter earnings of 70 cents to 80 cents a share, below the 86-cent consensus among analysts Refinitiv polled.
For fiscal 2023, HP called for $3.20 to $3.60 in adjusted earnings per share, below Refinitiv’s consensus of $3.62 per share.