HP to lay off 4,000-6,000 employees globally over the next three years

Computer maker HP Inc. is the latest to join the bandwagon of tech companies going for mass layoffs to cut costs ahead of an impending recession. On Tuesday, HP announced that it would let go of 4,000 to 6,000 employees over the next three years. This is part of HP’s ‘Future Ready Transformation' plan for the fiscal year 2023, which aims to drive significant structural cost savings through digital transformation, portfolio optimisation, and operational efficiency.

“These actions will result in annualised gross run rate savings of at least $1.4 billion by the end of the fiscal year 2025. The company estimates it will incur approximately $1.0 billion in labour and non-labour costs related to restructuring and other charges, with approximately $0.6 billion in the fiscal year 2023. The rest split approximately equally between the fiscal years of 2024 and 2025,” the company said in its financial results statement for the quarter ending October 31, 2021.

As of 2021, HP had 51,000 employees, down from 53,000 in 2020. In 2019, the tech giant said it would cut between 7,000 and 9,000 jobs.

The latest downsizing comes after the firm saw a deterioration in the sales of computers. However, when the COVID-19 pandemic struck the world, people rushed to buy computers to work and from their homes.

HP said revenue in the October 2021 ended quarter declined 0.8 percent year-over-year to $14.80 billion. Revenue in the Personal Systems segment, which includes PCs, fell 13 percent to $10.3 billion, as units dropped 21 percent. Consumer revenue in the segment slid 25 percent. Printing revenue, at $4.5 billion, was down 7 percent, as units fell 3 percent.

From a profitability standpoint, HP reported that the operating margin for the Personal Systems segment contracted to 4.5 percent from 6.9 percent in the prior quarter.

HP has also announced downbeat earnings guidance. The company provided a range of adjusted fiscal first-quarter earnings from 70 cents to 80 cents per share, below the consensus of 86 cents among analysts polled by Refinitiv, CNBC reported.