Printer problem: HP says to slash up to 9,000 jobs to cut costs

HP estimates that it can save $1bn by the end of its 2022 fiscal year, but the restructuring will also cost it $1bn.

Personal computer and printer maker HP Inc said on Thursday it would cut up to 16 percent of its workforce as part of a restructuring plan aimed at cutting costs.

The company will cut about 7,000 to 9,000 jobs through a combination of “employee exits and voluntary early retirement”, it said in a statement.

HP estimates that it will be able to save about $1bn by the end of its 2022 fiscal year, which ends on October 31.

The company had about 55,000 employees worldwide as of October 2018, according to a filing with the US Securities and Exchange Commission. That would mean the company wants to reduce its workforce by up to 16 percent through the cuts.

HP said it expects to incur an overall cost of about $1bn to restructure.

“We are taking bold and decisive actions as we embark on our next chapter,” said Enrique Lores, the company’s incoming chief executive officer and longtime executive.

“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.”

Lores will take over the CEO position on November 1 from Dion Weisler who is stepping down due to family and health reasons.

The HP headquarters in Palo Alto, California also said its board on September 30 approved an additional $5bn in share buybacks. Its share price has fallen by about 10 percent so far this year up to Thursday’s market close, before the announcement.

HP’s has been financially hit by falling sales in its printing business, a major source of profit which was recently dubbed a “melting ice cube” by analysts at Sanford C Bernstein.

The company said it would make changes to its printing unit to focus on providing more services, including raising prices for printers that can be used with non-HP ink cartridges.

HP expects to generate cash of at least $3bn in its 2020 fiscal year and return at least 75 percent to its shareholders, done through a 10 percent increase in its quarterly dividend as well as share buybacks.

The company 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.

SOURCE: News agencies