In response to declining personal computer demand that has reduced revenues, HP Inc. announced it will cut up to 6,000 jobs over the next three years.
The fiscal year ending in October 2023 would see earnings of $3.20 to $3.60 per share, excluding certain factors, according to a statement released on Tuesday by Palo Alto, California-based HP. According to data gathered by Bloomberg, analysts had projected a share price of $3.61 on average. The amount of free cash flow will be close to $3.25 billion, which is less than anticipated.
Enrique Lores, the company’s chief executive, stated in an interview that the prediction implies a 10% decline in computer sales for the fiscal year. We anticipate a difficult market climate, he said.
HP has experienced a persistent decline in PC demand, despite making the majority of its money from selling computers. According to Lores, it began with low-end consumer goods but has since spread as businesses downsize and reduce their investments in technology. Global PC shipments decreased almost 20% in the third quarter, according to industry analyst Gartner Inc., the biggest decline since the company began monitoring the statistic in the middle of the 1990s. Dell Technologies Inc., which receives 55% of its revenue from the sale of PCs, provided a gloomy outlook for the current quarter and mentioned that some customers had “paused purchases” for the time being.
According to Lores, HP will cut its real estate footprint and its 61,000 global employees by up to 10% over the next three years in order to control costs. Restructuring costs for the corporation will total over $1 billion, with roughly 60% of those costs falling under the recently started fiscal 2023. The initiative is anticipated to save $1.4 billion annually by the end of the fiscal year 2025, according to HP’s press release.
The shares decreased by nearly 1% in after-hours trading after reaching a New York closing price of $29.38. This year, the stock has decreased by 22%.
HP, which also manufactures printers, plans to engage in fresh business ventures such subscription services. According to Lores, the company already sells ink subscriptions and will now look into ideas for additional products including PCs and printer paper.
To slightly beat analyst projections, revenue for the fiscal fourth quarter decreased 11% to $14.8 billion. The earnings were 85 cents per share, above expectations even after subtracting some things.
Sales in the personal systems sector, which includes the computer industry, decreased by 13% to $10.3 billion, driven mostly by a 25% decline in consumer income. Printing unit sales dropped 7% to $4.5 billion, exceeding expectations.
