HP is set to cut 4,000 to 6,000 jobs by FY28 while ramping up its AI initiatives
HP Inc announced on Tuesday its intention to reduce its workforce by 4,000 to 6,000 jobs globally by the end of fiscal 2028. This decision is part of the company’s strategy to streamline operations and leverage artificial intelligence to accelerate product development, enhance customer satisfaction, and boost productivity, according to the reports. During a media briefing call, chief executive officer Enrique Lores stated that the teams expected to be impacted include those focused on product development, internal operations, and customer support. “We expect this initiative will create $1 billion in gross run rate savings over three years,” Lores said, adding: “It’s something we have to do to make sure the company stays competitive.” Earlier this year, HP laid off between 1,000 and 2,000 employees as part of a restructuring plan that had been announced previously. The company announced on Tuesday that the cuts will result in approximately $650 million in restructuring charges, which includes around $250 million in fiscal 2026, starting on November 1. As of October 2024, reports says that HP employed approximately 58,000 individuals.
Almost three years prior, the PC manufacturer introduced an alternative cost-reduction initiative targeting the elimination of 4,000 to 6,000 positions. At that time, the company had a workforce of 61,000 employees and reported that the plan led to gross savings of $2.2 billion. Profit for the year, excluding items such as restructuring charges, is anticipated to fall within the range of $2.90 to $3.20 per share. Analysts had projected, on average, $3.32. HP anticipates earnings per share, excluding items, to range from 73 to 81 cents for the period ending in January, in contrast to analysts’ average estimate of 78 cents. The demand for personal computers equipped with artificial intelligence has seen a significant increase, representing over 30 percent of HP’s shipments in the fourth quarter that concluded on October 31. Morgan Stanley analysts have warned that a global surge in memory chip prices, fueled by increasing demand from data centres, could lead to higher costs and exert pressure on profits for consumer electronics manufacturers like HP, Dell, and Acer. The shortfall arises from increasing memory chip costs, which are counterbalancing the advantages of a PC sales cycle. HP possesses sufficient inventory to mitigate the effects in the first half of the year.
“For the second half, we are taking a prudent approach to our guide, while at the same time we’re implementing aggressive actions,” Lores stated. These steps encompass the addition of more memory suppliers, the reduction of memory in products where customers do not require it, and the adjustment of prices when necessary. HP has been implementing cost-cutting measures and relocating manufacturing for nearly all products sold in North America to facilities outside of China in an effort to address tariffs. Currently, as customers transition from older PCs and embrace new AI features, the company is encountering increasing memory prices. In the fiscal fourth quarter, which concluded on October 31, HP announced a 4.2 percent increase in sales, reaching $14.6 billion. Profit, excluding certain items, stood at 93 cents per share. Analysts had anticipated adjusted earnings of 92 cents a share, alongside revenue of $14.5 billion, on average. Revenue in HP’s PC unit saw an increase of 8 per cent, propelled by customers transitioning to Windows 11 machines and a rising interest in AI PCs equipped with specialized chips. Sales in the printer unit declined by 4 percent to $4.27 billion, aligning with estimates.
Recently, Apple has become one of the companies that have cut jobs as part of a significant restructuring of its sales division. The company issued termination notices to numerous employees worldwide. The latest series of reductions follows a previous wave in Australia and New Zealand, during which almost 20 positions were eliminated. Throughout the wider technology sector, layoffs persist. Amazon Inc recently announced plans to cut more than 14,000 jobs, while Meta Platforms Inc has trimmed several hundred roles within its AI operations. Amazon is embarking on one of its most substantial restructuring initiatives to date. According to the reports, the company has eliminated approximately 30,000 corporate positions as it aims to control expenses after a significant increase in hiring during the pandemic years. Despite Amazon’s global workforce totaling approximately 1.55 million, the most recent layoffs impact nearly 10 percent of its 350,000 corporate employees. This marks the company’s largest round of layoffs since the elimination of 27,000 positions in late 2022 and early 2023.
