SEATTLE: HP Inc gave a profit outlook for current year that fell short of estimates and the company says it will cut 4,000 to 6,000 employees through fiscal 2028 by using more artificial intelligence (AI) tools.
The personal computer (PC) and printer maker will exit 2028 with gross savings of US$1bil annually as a result of the cuts.
The savings will come from HP applying AI tools to areas like product development, customer support, sales and manufacturing, chief executive officer Enrique Lores said in an interview.
“It’s something we have to do to make sure the company stays competitive,” he said.
The cuts will result in about US$650mil in restructuring charges, with about US$250mil of that in fiscal 2026, which began Nov 1, the company said on Tuesday in a statement.
The company’s workforce was about 58,000 as of October 2024.
Three years ago, HP unveiled a different cost-cutting programme also aimed at eliminating 4,000 to 6,000 jobs. At the time, it employed about 61,000 workers.
The company said that plan resulted in gross savings of US$2.2bil.
Profit for the year, excluding items such as the restructuring charges, will be US$2.90 to US$3.20 a share.
Analysts, on average, expected US$3.32, according to Bloomberg-compiled data.
HP projects earnings per share, excluding items, to be 73 US cents to 81 US cents in the period ending in January. Wall Street estimated 78 US cents.
The shortfall stems from rising costs for the memory chips that go into computers. That increase blunts the benefits of a sales cycle for PCs.
HP has enough inventory to limit the impact 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” like bringing on more memory suppliers, putting less memory in products where it isn’t needed by customers and raising prices when necessary, Lores said.
In the fiscal fourth-quarter, which ended Oct 31, HP said sales rose 4.2% to US$14.6bil.
Profit, excluding some items, was 93 US cents a share. Analysts, on average, projected adjusted earnings per share of 92 US cents on revenue of US$14.5bil.
Revenue rose 8% in HP’s PC unit, fuelled by customers upgrading to machines with Windows 11 and interest in AI PCs that have special chips. Sales in the company’s printer unit fell 4% to US$4.27bil, in line with estimates. — Bloomberg
