HP To Cut Up To 9,000 Jobs Over 3 Years

(RTTNews) - Hewlett-Packard Co. is planning to reduce global workforce by about 7,000 to 9,000 employees over three years as part of its restructuring efforts to strengthen weakening sales.

The actions, under the incoming President and Chief Executive Officer Enrique Lores, aims to simplify HP's operating model and to become a more digitally enabled company.

HP noted that the planned job reduction will be through a combination of employee exits and voluntary early retirement. Of the total labor and non-labor costs of about $1 billion, about $100 million will be recorded in the fourth quarter of fiscal 2019, $500 million in fiscal 2020 and the rest split between fiscal 2021 and 2022.

At HP's 2019 Securities Analyst Meeting, Lores, who is succeeding current President and CEO Dion Weisler on November 1, said, "We are taking bold and decisive actions as we embark on our next chapter."

While announcing the CEO change in mid August, the company noted that Lores, currently President of HP's Imaging, Printing and Solutions business, was working with HP's board on a comprehensive global review of the company's strategy and business operations over the past year.

The fiscal 2020 restructuring plan, which will be completed in fiscal 2022, would incur about $1 billion charges as well as annualized gross run rate savings of about $1 billion.

In a statement, the company also announced its financial outlook for fiscal 2020. HP expects earnings per share in the range of $1.98 to $2.10, including $0.22 to $0.24 per share charges primarily related to restructuring. Adjusted earnings per share for the year is expected to be in the range of $2.22 to $2.32.

For fiscal 2019, HP recently revised up its outlook, expecting earnings per share in the range of $2.31 to $2.35 and adjusted earnings per share in the range of $2.18 to $2.22.

In its recently announced third-quarter results, the company reported a 34 percent year-over-year growth in profit, while sales were up just 0.1 percent. Personal Systems net revenue grew, but printing net revenue fell 5 percent with weakness in hardware units.

The company also expects to increase the proposed quarterly dividend by 10 percent and buy back more shares.

In May last year, HP was expecting about 4,500 to 5,000 employees to exit the company by the end of fiscal year 2019. In its 2016 restructuring plan, HP was expecting that around 4,000 employees would exit by the end of 2019.