Bloomberg News reports HP Inc. will slash as much as 16% of its workforce as part of a broad restructuring meant to cut costs and boost sales growth amid the company’s first change in top leadership in four years. HP will cut 7,000 to 9,000 positions through firings and voluntary early retirement. The job reductions will help save about $1 billion by the end of fiscal 2022, the company said Thursday in a statement. HP had 55,000 employees as of a year ago, the last time it disclosed the figure, the report said.
“We are taking bold and decisive actions as we embark on our next chapter,” said Enrique Lores, incoming President and Chief Executive Officer, HP Inc., said in a press release. “We see significant opportunities to create shareholder value and we will accomplish this by advancing our leadership, disrupting industries and aggressively transforming the way we work. We will become an even more customer-focused and digitally enabled company, that will lead with innovation and execute with purpose.”
In the statement, HP outlined the restructuring:
Today, HP Inc. announced a fiscal year 2020 restructuring plan to simplify its operating model and become a more digitally enabled company. The company expects to reduce gross global headcount by approximately 7,000-9,000 employees through a combination of employee exits and voluntary early retirement. The company estimates that it will incur total labor and non-labor costs of approximately $1.0 billion in connection with the restructuring and other charges, with approximately $100 million in fiscal Q4 of 2019, $500 million in fiscal 2020 and the rest split between fiscal 2021 and 2022. These actions are expected to be completed in fiscal 2022. The company estimates that these actions will result in annualized gross run rate savings of about $1.0 billion by the end of fiscal 2022.
The Bloomberg report also added HP would take steps to improve profitability in its printing unit. “HP will raise prices for printers that can be used with non-HP ink cartridges, so that the hardware is more profitable,” the report stated. “Currently, printers are sold cheaply and the unit’s operating profit margin is padded by the ink supplies. HP will offer some lower-priced printers, but employ new technologies to ensure they are only compatible with HP ink.
HP will also start selling the underlying technology of its inkjet printing, known as microfluidics, to the health-care and cosmetics industries, among others.”