HP Inc., a manufacturer of computers, announced on Tuesday that it will lay off 4,000 to 6,000 workers over the next three years. Following the news, shares climbed as much as 1% in extended trade.
The newest technology business to declare its intention to trim down in light of economic difficulties is HP. Salesforce, Microsoft, and Facebook’s parent company Meta are a few companies that have implemented comparable modifications. HP, on the other hand, is taking action in response to a decline in computer sales. As people raced to work and play from home, the Covid epidemic initially caused a PC buying frenzy. The extraordinary growth, however, did not persist.
In a statement, HP claimed that its “Future Ready Transformation plan” will save the company at least $1.4 billion annually in the next three years in terms of annualised gross run rate, with reorganisation costs totaling about $1 billion. Of the $1 billion, $600 million will come from the fiscal year 2023, which runs from October 1, 2023, to October 31, 2023. HP said the remaining funds will be distributed equally between the fiscal years 2024 and 2025.
In October 2021, HP employed about 51,000 people. HP announced in 2019 that it would lay off between 7,000 and 9,000 workers.
According to HP, sales for the fiscal fourth quarter, which ended on October 31, fell by 0.8% from the prior year to $14.80 billion. PCs are included in the Personal Systems segment, where revenue decreased 13% to $10.3 billion while units decreased 21%. Consumer segment revenue fell by 25%. As units fell 3%, printing revenue, at $4.5 billion, was down 7%.
Revenue from personal systems fell by 3% and that from printing fell by 6% in the previous quarter.
In terms of profitability, HP stated that the operating margin for the Personal Systems division decreased to 4.5% from 6.9% in the previous quarter.
HP also provided negative profit guidance on Tuesday.
The company reported adjusted first-quarter earnings between 70 and 80 cents per share, falling short of the Refinitiv-surveyed analysts’ consensus estimate of 86 cents.
HP projected adjusted earnings per share for the 2023 fiscal year of $3.20 to $3.60, less than the $3.62 per share Refinitiv consensus.