Enrique Lores, President and Chief Executive Officer of HP Inc., speaks at the COMPUTEX Forum in Taipei, Taiwan on June 3, 2024.
Anne Wang | Reuters
Manufacturers of computers and printers HP Co., Ltd. announced on Tuesday that it would cut its workforce by 4,000 to 6,000 people, representing a reduction of up to 10%. HP also released a lower-than-expected profit forecast for the new fiscal year.
The company’s shares fell 6% in extended trading.
Here is a comparison of HP and LSEG consensus estimates:
EPS: 93 cents adjusted vs. 92 cents expected Revenue: $14.64 billion vs. $14.48 billion expected
HP’s revenue for the quarter ended Oct. 31 increased 4% from the same period last year, according to the statement. Net income was $795 million, or 84 cents per share, up from $763 million, or 80 cents per share, in the year-ago period.
For HP’s fiscal first quarter of 2026, the company called for adjusted net income per share of 73 cents to 81 cents, compared to the LSEG consensus of 79 cents. For the full fiscal year 2026, HP expects adjusted earnings of $2.90 to $3.20 per share, below the LSEG consensus of $3.33.
“HP’s outlook reflects additional costs caused by trade-related regulations and related mitigation measures currently in place in the United States,” the company said in a statement.
The company’s Personal Systems segment, which includes desktop and laptop computers, contributed $10.35 billion in revenue, 8% above the StreetAccount consensus of $10.15 billion.
HP said the job cuts are expected to be completed by the end of fiscal 2028. The company said the reorganization is expected to result in at least $1 billion in annual gross utilization savings by the end of fiscal 2028. HP said it expects to incur costs of approximately $650 million, of which $250 million will occur in fiscal 2026.
“As we look to the future, we see significant opportunity to incorporate AI into HP to accelerate product innovation, improve customer satisfaction and increase productivity,” HP CEO Enrique Lores said on a conference call with analysts.
Business executives across industries want to utilize generative artificial intelligence products to speed up software development and automate customer service. Cloud providers have been buying large amounts of memory to meet computing demands from companies building AI models, such as Anthropic and OpenAI, leading to higher costs per gigabyte of RAM this year.
HP, which had 58,000 employees as of December, announced similar layoffs in 2022. Several other technology companies have also announced layoffs in recent months as U.S. consumers face higher prices and interest rates.
“Memory costs are currently 15-18% of the cost of a typical PC, and while we expected them to increase, the rate has accelerated in recent weeks,” Lores said.
The company expects subsequent profits microsoft Lores said the company stopped supporting the Windows 10 operating system in October, which will force people to buy new machines. He said about 60% of HP’s installed base has migrated to Windows 11.
Revenue from HP’s printing business fell 4% to $4.3 billion. Karen Parkhill, the company’s finance director, said the pricing environment was competitive and customers were putting off purchasing new models.
As of Tuesday’s close, HP stock was down 25% since the beginning of the year, while the S&P 500 index was up 15% in the same period.
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