Enrique Lores, President and Chief Executive Officer of HP Inc. speaks at COMPUTEX forum in Taipei, Taiwan June 3, 2024.
Ann Wang | Reuters
PC and printer maker HP Inc. said Tuesday it’ll lower its headcount by 4,000 to 6,000 people, representing a cut of up to 10%. HP also issued a lower-than-expected earnings projection for the new fiscal year.
Shares of the company fell 6% in extended trading.
Here’s how HP did versus LSEG consensus estimates:
- EPS: 93 cents adjusted vs. 92 cents expected
- Revenue: $14.64 billion vs. $14.48 billion expected
HP’s revenue increased 4% year over year in the quarter, which ended on Oct. 31, according to a statement. Net income of $795 million, or 84 cents per share, was up from $763 million, or 80 cents per share, in the same quarter a year ago.
For the first quarter of HP’s fiscal 2026, the company called for 73 cents to 81 cents in adjusted net earnings per share, while the LSEG consensus was 79 cents. For all of fiscal 2026, HP sees $2.90 to $3.20 in adjusted per share, below the LSEG consensus of $3.33.
“HP’s outlook reflects the added cost driven by the current U.S. trade-related regulations in place, and associated mitigations,” the company said in the statement.
The company’s personal systems unit that includes desktop and laptop computers contributed $10.35 billion in revenue, up 8% and above StreetAccount’s $10.15 billion consensus.
HP said it expects to complete the headcount reduction by the end of fiscal 2028. The company said the restructuring will result in savings of at least $1 billion in annualized gross run rate by the end of fiscal 2028. HP said it expects to incur about $650 million in charges, of which $250 million will happen in fiscal 2026.
“As we look ahead, we see a significant opportunity to embed AI into HP to accelerate product innovation, improve customer satisfaction and boost productivity,” HP CEO Enrique Lores said on a conference call with analysts.
Corporate executives across industries are hoping to draw on generative artificial intelligence products to speed up software developers and automate customer service. Cloud providers are buying large supplies of memory to meet computing demand from companies that build AI models, such as Anthropic and OpenAI, leading to a rise in the cost per gigabyte of RAM this year.
HP, whose headcount stood at 58,000 as of December, announced a similarly sized round of layoffs in 2022. Several other technology companies have announced layoffs in recent months as U.S. consumers face higher prices and interest rates.
“Memory costs are currently 15 to 18% of the cost of a typical PC, and while an increase was expected, its rate has accelerated in the last few weeks,” Lores said.
The company does expect to benefit after Microsoft stopped supporting its Windows 10 operating system in October, which will lead people to buy new machines, Lores said. Around 60% of HP’s installed base has moved to Windows 11, he said.
HP’s printing business did $4.3 billion in revenue, down 4%. The pricing environment is competitive, and customers are putting off purchases of new models, said Karen Parkhill, the company’s finance chief.
As of Tuesday’s close, HP shares were down 25% for the year, while the S&P 500 index has gained 15% in the same period.
WATCH: HP CEO: Tariffs are mostly nonmaterial
