HP will cut 6,000 jobs and cut costs by $1.4 billion, the Portfolio optimization plan aims to phase out some PCs and sell more expensive subscriptions.
HP has announced that it will cut between 4,000 and 6,000 jobs as part of a cost-cutting campaign aimed at generating $1.4 billion in profits over the coming years. It was announced on the occasion of publishing the annual results of HP, which closed its accounts on October 31.
The company, which currently has about 61,000 employees, up about 10,000 from a year ago, announced its plan along with fourth-quarter 2022 results, which posted revenue of $14.8 billion. 11% YoY (and 8% in constant currency) and operating profit of $1.3 billion. For the full year, revenue fell one percent to $63 billion, and operating profit fell to $6.6 billion.
This new strategy will allow us to better serve our customers and create long-term value by reducing our costs and reinvesting in key areas for the future, an HP spokesperson said. The company’s printers accounted for $3.7 billion of that profit on revenue of $18.9 billion — slightly better than the $2.9 billion revenue of $44.1 billion associated with personal computers.
Chairman and CEO Enrique Lores described the results as a strong year-end despite an unstable macro environment and lower demand in the second half, but added that HP’s “Future-Ready Transformation Plan” to deliver significant structural achievements needs what he calls a strategy. cost savings through digital transformation, portfolio optimization and operational efficiency”.
Tech companies large and small have slowed hiring plans or announced job cuts in recent months to, among other things, stem a possible economic downturn. Satya Nadella-led Microsoft is one of the first tech giants to lay off staff as part of its restructuring. A Microsoft spokesperson said: We have cut a small number of jobs. Like all companies, we regularly evaluate our professionals and make structural adjustments accordingly. “We have notified a small number of employees that their roles have been eliminated,” a Microsoft spokesperson said.
Intel is also facing a sharp decline in demand for its core business, PC processors, and is struggling to regain market share lost to rivals such as Advanced Micro Devices. In July, the company warned that 2022 sales would be about $11 billion below its forecast.
The company has announced significant workforce reductions, possibly several thousand, to cut costs and cope with a depressed PC market. The company-wide job cuts will hit sales and marketing particularly hard, according to people familiar with the situation.
Facebook’s parent company, Meta Platforms, has cut its goal of adding software engineers this year from 10,000 to about 6,000. Amazon’s retail division also lowered its hiring target for 2022. Tesla announced on July 14 that it was laying off 229 data annotation workers. are part of the company’s large Autopilot team and are closing the San Mateo, Calif. office where they work, per California regulations. A self-managed technology company headquartered in Pittsburgh.
Oracle, founded by one of the tech giants, Larry Ellison, is also laying off staff as part of the restructuring. The company has cut more than 200 jobs in California amid plans to cut costs to save $1 billion.
Amid layoffs at HP, CEO Enrique Lores sees a clear opportunity to simplify, streamline and reduce capital spending. In 2021 and 22, we had to double the investment in boards in many different parts to compensate for the component shortage due to the component shortage,” Lores said.
In doing so, HP created more product options. But he also hinted that some product lines may disappear. For example, in the personal systems industry, there is an opportunity to significantly reduce the number of unique stock keeping units (SKUs), he said.
HP also has plans to sell more hardware by combining its products with Poly products. We are announcing a definitive agreement to acquire Poly, a leading global provider of enterprise collaboration solutions, in a transaction valued at $40 per share representing aggregate value. $3.3 billion, including Poly’s net debt, HP announced in March.
We will also expand our consumer service offerings beyond Instant Ink to include new areas such as paper and print media, Lores told investors — before later revealing that consumer ink as a service is more cost-effective for businesses than managed print services. .
Lores said savings from the Future Ready Transformation plan would be a key driver of improved results in the second half of 2023, and the company would stop buying back shares to have the cash it needs to face what PDG says is a challenge. macroeconomic environment for the coming year.
As of October 2021, HP has approximately 51,000 employees. In 2019, HP announced that it would cut 7,000-9,000 jobs. HP said revenue for the fiscal fourth quarter ended Oct. 31 fell 0.8% year over year to $14.80 billion.
In the Personal Systems segment, revenue fell 13% to $10.3 billion, including a 21% decline in units. Consumer incomes in this segment decreased by 25%. The printing sector’s revenue of $4.5 billion was down 7%, and the number of units was down 3%.
In the previous quarter, Personal Systems revenue was down 3%, and printing revenue was down 6%. In terms of profitability, HP reported that its Personal Systems segment’s operating margin fell to 4.5% from 6.9% in the previous quarter.
What do you think of these cuts at HP?
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