HP Announces Job Cuts as Profit Outlook Falls Short of Estimates
(Bloomberg) — HP Inc. gave a profit outlook for the current year that fell short of forecasts, and the company said it would cut 4,000 to 6,000 jobs by fiscal 2028 by using more artificial intelligence tools.
The PC and printer manufacturer will exit 2028 with gross savings of $1 billion per year as a result of the cuts. The savings will come from HP applying AI tools to areas such as product development, customer support, sales and manufacturing, Chief Executive Enrique Lores said in an interview. “This is something we need to do to ensure the company remains competitive,” he said.
The cuts will result in restructuring charges of about $650 million, about $250 million of which will be in fiscal 2026, which begins Nov. 1, the company said Tuesday. The company’s workforce was approximately 58,000 as of October 2024.
Three years ago, HP announced a different cost-cutting program that also aimed to eliminate 4,000 to 6,000 jobs. At that time, the company employed approximately 61,000 workers. HP said the plan resulted in gross savings of $2.2 billion.
Excluding items such as restructuring charges, earnings for the year will be between $2.90 and $3.20 per share. Analysts on average expected $3.32. HP estimates earnings per share, excluding items, will be between 73 and 81 cents for the period ending in January. On average, analysts predicted 78 cents.
This gap is due to the rising cost of memory chips that go into computers; This is a jump that blunts the benefits of the sales cycle for PCs. HP has sufficient inventory to limit the impact in the first half of the year.
“While we are taking a cautious approach to our guidance in the second half, we are also taking aggressive actions such as bringing on more memory suppliers, putting less memory in products customers don’t need, and increasing prices when necessary,” Lores said.
To reduce tariff impacts, HP is cutting costs for nearly all of its products sold in North America and moving to production facilities outside China. It is now struggling with rising memory prices as customers buy new computers to replace old hardware and feature new AI features.
Shares were down about 4% in extended trading after closing at $24.32 in New York. The stock had fallen 25% this year before the results were released.
HP announced that its sales increased 4.2% to $14.6 billion in the fourth quarter of the fiscal year ending October 31. Excluding certain items, earnings were 93 cents per share. Analysts on average forecast adjusted earnings per share of 92 cents and revenue of $14.5 billion.
Revenue at HP’s PC unit rose 8%, driven by customers upgrading to Windows 11-installed machines and interest in AI PCs with custom chips.
Sales at the company’s printer unit fell 4% to $4.27 billion, in line with forecasts.
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