HP Layoffs Will Cut Up To 6,000 Jobs Over Three Years
The Palo Alto, Calif. hardware giant’s notebook revenue fell 23 percent in the fourth quarter compared to the same period last year. CEO Enrique Lores says the ‘very tough decision’ on workforce reductions necessary as HP looks to realize $1.4 billion in gross annualized run rate savings by 2025. ‘The writing was on the wall,’ one channel partner says.
HP Inc. on Tuesday said it would eliminate between 4,000 to 6,000 people from its workforce by 2025 after a tough fourth-quarter earnings report showed a year-over-year revenue drop of 11.2 percent to $14.8 billion.
Palo Alto, Calif.-based HP had approximately 51,000 global employees as of December 2021, according to a regulatory filing.
The company’s annual net revenue held at $63 billion in 2022, a .8 percent decline from 2021 net revenue. Still, notebook sales fell 23 percent to $6.4 billion following an overall consumer PC market softening in 2022.
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“These are the toughest decisions we have to make because it involves our colleagues,” HP CEO Enrique Lores said on an earnings conference call Tuesday with analysts after the news was disclosed in a media briefing.
During the earlier briefing, Lores told CRN that channel partners could count on the company’s continued support despite cost-cutting measures.
“The channel is the way we go to market and how we manage the majority of our sales,” Lores said. “So clearly, this is something we are going to be protecting to make sure that our channel partners continue to have the right relationships, the right connection, the right engagement with the company. Making sure we are close to our partners is even more important than ever.”
Lores said despite challenges, the company did see strong momentum in its growth portfolio, which grew to $11 billion in fiscal year 2022 – about $1 billion above its expected target. That portfolio includes gaming, peripherals, workforce services and solutions, consumer subscriptions, industrial graphics and 3D.
“What’s really important is that this builds a strong foundation,” he said. He said HP is “optimizing our portfolio, continuing to invest in growth areas, and reducing the complexity in our core business.”
Mike Turicchi, vice president of Gainesville, Va.-based NCS Technologies, said cost-cutting measures are necessary during tough economic times. “I’m not surprised,” Turicchi said of HP’s three-year cost-cutting plan. “We’re hearing about a lot of companies who are really trimming the fat and looking at the bigger picture. We have a long road ahead and I expect we’ll continue to see other companies making headcount reductions. The writing was on the wall.”
Turicchi said in light of cost cutting measures, channel resellers should look to diversify offerings. “In general, channel partners and the greater tech industry is going to feel the pinch and will need to broaden portfolios and look at different revenue streams.”
He said HP’s $3.3 billion purchase of Poly earlier this year sets the firm up to take advantage of increased peripheral demand for hybrid work and channel partners would be wise to follow suit. “If you look at the overall trend in PC hardware, it was perfect for what HP has been doing with hybrid,” he said. “We’re not going back to the way we were before the pandemic.”
In a statement on earnings, HP’s Lores added, “We had a solid end to our fiscal year despite navigating a volatile macro-environment and softening demand in the second half. Looking forward, the new Future ready strategy se introduced this quarter will enable us to better serve our customers and drive long-term value creating by reducing our costs and reinvesting in key growth initiatives to position our business for the future.”