NEW YORK - HP will eliminate 4,000 to 6,000 jobs over the next three years amid declining demand for personal computers that has cut into profits.
To manage costs, HP will cut as much as 10 per cent of its 61,000-employee global workforce over the next three years and reduce its real estate footprint, chief executive officer Enrique Lores said on Tuesday.
On the impact to the Singapore workforce, an HP spokesman told The Straits Times: “We are not disclosing any region or country details.”
“We are committed to treating people with care and respect – including financial and career services support to help them find their next opportunity,” the spokesman added.
HP Singapore – the tech giant’s Asia-Pacific headquarters and its global manufacturing base of printer heads and ink-related supplies – has a 4,000-strong workforce here as at September 2021.
Numerous tech companies have announced workforce reduction plans in recent weeks. Meta Platforms and Amazon.com each began cutting about 10,000 jobs, while Twitter wiped out more than half its staff of 7,500 employees. Hard-drive maker Seagate Technology Holdings said it would cut about 3,000 jobs, while Cisco Systems last week unveiled a plan to reduce an unspecified number of jobs and close offices.
On Tuesday, HP said earnings, excluding some items, will be US$3.20 to US$3.60 a share for the fiscal year ending in October 2023. Analysts, on average, projected US$3.61 a share, according to data compiled by Bloomberg.
The forecast assumes a 10 per cent decline in computer sales in the fiscal year, Mr Lores said in an interview. Free cash flow will be about US$3.25 billion, which also falls short of estimates.
HP, which makes most of its money by selling computers, has been navigating a sustained downturn in PC demand. The downturn began with lower-end consumer products but has spread as companies reduce their workforces and curb technology investment, Mr Lores said.
Industry analyst Gartner said global PC shipments declined almost 20 per cent in the third quarter – the biggest fall since it began tracking the metric in the mid-1990s. Dell Technologies, which generates 55 per cent of its revenue from PC sales, on Monday gave a lacklustre outlook for the current quarter and said some customers have “paused purchases” in the near term.
HP will incur an estimated US$1 billion (S$1.4 billion) in restructuring charges, with about 60 per cent in fiscal year 2023, which began in November. By the end of fiscal 2025, the plan should save at least US$1.4 billion a year, HP said in the statement.
“It’s an acknowledgment of the new realities of the printing and PC market,” said analyst Woo Jin Ho at Bloomberg Intelligence.
HP shares gained about 1 per cent in extended trading after closing at US$29.38 in New York. The stock has dropped 22 per cent this year.
HP, which also makes printers, will look to invest in new lines of business such as subscription services. The company already offers ink subscriptions, and will now explore plans for other products like printer paper and computers, Mr Lores said.
Fiscal fourth-quarter revenue fell 11 per cent to US$14.8 billion – slightly better than analysts’ expectations. Profit, excluding some items, was 85 US cents a share, also topping estimates.
Sales in the personal systems group, which includes the computer business, fell 13 per cent to US$10.3 billion, led by a 25 per cent drop in consumer revenue. Sales in the printing unit dropped 7 per cent to US$4.5 billion, which beat estimates. BLOOMBERG
With additional information from The Straits Times