The cut will be between 4,000 to 6,000 employees out of the 61,000 it currently has worldwide – and will take place gradually until the end of the 2025 fiscal year.
The layoffs include only HP’s consumer arm, and not Hewlett Packard Enterprise, a server and business services firm that spun off from HP in 2015.
The restructuring, which will include the sale of real estate, will allow savings of at least US$1.4 billion per year, according to the company’s calculations, and will demand an estimated cost of US$1,000 million, which will especially impact the accounts of the fiscal year 2023.
HP’s forecasts assume a 10% drop in PC sales for this year, a decline that is pointed out as one of the main reasons for the cut.
“We expect a challenging market situation”said the CEO, Enrique Lores, in an interview broadcast by the Bloomberg agency.
After a pandemic that led to a “boom” in the sale of computers, demand fell to a 20-year low, according to various market research. At HP alone, fourth-quarter profit fell 11%.
The decline began in low-cost consumer PCs but has recently spread to business PCs, hand in hand with a worsening global economic outlook.
According to Gartner, an industry analyst firm, worldwide PC shipments fell nearly 20% in the third quarter, the biggest drop since it began measuring them in the mid-1990s.
This has a full impact on companies like HP and Dell, whose income depends – for the most part – on the sale of computers.
“(HP’s layoffs) are a sign of the new realities in the PC and printer market,” analyst Woo Jin Ho told Bloomberg.
Looking ahead, HP intends to strengthen its subscription business: the firm already offers services that allow receiving ink cartridges on a monthly basis and intends to extend them to sheets of paper and computers.
Layoffs in technology
HP, however, is not the first firm in the sector to announce layoffs.
In October alone, the sector lost 9,587 jobs, the highest monthly number since November 2020, in the midst of a pandemic, said the consultancy Challenger, Gray & Christmas,
Firms are especially affected by the successive increases in interest rates arranged by the Federal Reserve (FED).), which encourages investors to sell their shares of riskier and more volatile assets “such as technology stocks-, as well as the lower economic activity in general.”
Meta (parent company of Facebook, Instagram and WhatsApp) and Amazon announced layoffs of almost 10,000 positions each, while Twitter – recently acquired by tycoon Elon Musk – cut its staff of 7,500 employees by more than half.
Similarly, hard drive maker Seagate laid off 3,000 employees, and Cisco Systems announced a cutback plan, though without specifying how many jobs will be affected.
Salesforce, Lyft and Stripe are other companies that reported layoffs, while Apple and Microsoft froze hiring in some of their sectors.
Source: Ambito
I am a 24-year-old writer and journalist who has been working in the news industry for the past two years. I write primarily about market news, so if you’re looking for insights into what’s going on in the stock market or economic indicators, you’ve come to the right place. I also dabble in writing articles on lifestyle trends and pop culture news.
