HP To Slash Several Thousand Jobs

HP Inc has announced plans to lay off between 7,000 and 9,000 employees worldwide over the next three years.

CNN’s Rob McLean had the news:

HP Inc. plans to reduce its global staff by thousands of employees over the next three years.

HP (HPQ) said Thursday that it intends to cut between 7,000 and 9,000 workers “through a combination of employee exits and voluntary early retirement.” It expects to complete the culling in the company’s 2022 fiscal year.

An HP spokesperson said the company currently has 55,000 employees globally. The staff reduction could account for as much as 16% of its workforce.

The company said it estimates the restructuring will cost the company about $1 billion total.

The move comes during a period of flux for HP. In August its president and CEO, Dion Weisler, announced he plans to step down in 2020.

Enrique Lores, HP’s incoming president and CEO, said Thursday that HP is “taking bold and decisive actions as we embark on our next chapter.”

“We see significant opportunities to create shareholder value and we will accomplish this by advancing our leadership, disrupting industries and aggressively transforming the way we work,” he said.

Nico Grant reported for Bloomberg:

HP also announced it expects profit, excluding restructuring costs and other items, to be $2.22 to $2.32 a share in fiscal 2020. Analysts, on average, estimated $2.23 a share, according to data compiled by Bloomberg. HP’s shares slid more than 5% in after-hours trading.

The company released the projections as it faces a number of uncertainties. Dion Weisler, the chief executive officer who has shepherded the company since its 2015 split with Hewlett Packard Enterprise Co., is stepping down Nov. 1 due to family health reasons. The incoming CEO, Enrique Lores, is a longtime HP executive. The company’s printing business, a major source of profit, has seen falling sales and recently was dubbed a “melting ice cube” by analysts at Sanford C. Bernstein. And an activist investor may be building a stake in the company, a Gordon Haskett analyst speculated Wednesday.

“We see ourselves starting a new chapter for HP and we will be announcing bold moves to support that statement,” Lores said in an interview. “We have spent a lot of time building this plan. We can embrace the changes we see happening in the market and that can help us position the company for the future.”

MarketWatch’s Therese Poletti noted:

The Palo Alto, Calif.-based computer and printing giant told Wall Street analysts at its annual investor meeting Thursday that it will save about $1 billion over the next three years with the restructuring. Job cuts will occur through a combination of employee exits and voluntary early retirement. One of the biggest moves HP HPQ, -1.02%   will make is a shift to more services in printing: Customers will have two options — either pay more for an unlocked printer and buy the ink of your choice, or pay less for the hardware with a locked printer that can only use HP printer-ink refills.

This change in business model is not without risk, as Evercore Securities analyst Amit Daryanani pointed out in a note during the meeting.

“This is an interesting idea but implementation of this and what … peers do will be crucial to ensure Hewlett-Packard doesn’t end up losing market share,” Daryanani wrote.

“We need to optimize our business model, maximize the installed base of 150 million printers,” said Tuan Tran, who will take over as president of HP’s printing business when Enrique Lores takes the helm as the company’s new chief executive next month.