HP planning to lay off 4,000 to 6,000 employees by FY28, boosts AI efforts

The teams that are expected to be impacted will include those focused on product development, internal operations, and customer support, its CEO Enrique Lores said during a media briefing call

HP Inc announced on Tuesday (local time) that it is planning to reduce its workforce by between 4,000 and 6,000 jobs worldwide by the end of fiscal 2028, as part of the company’s efforts to streamline operations and utilise artificial intelligence (AI) to accelerate product development, enhance customer satisfaction and boost productivity, Reuters reported.

 

The teams expected to be impacted include those focused on product development, internal operations and customer support, chief executive officer Enrique Lores said during a media briefing call.

 

“We expect this initiative will create $1 billion in gross run rate savings over three years,” Lores said, adding: “It’s something we have to do to make sure the company stays competitive.”

 

Earlier this year, HP laid off 1,000 to 2,000 employees as part of a previously announced restructuring plan. 

HP job cuts

 

The cuts will lead to about $650 million in restructuring charges, including about $250 million in fiscal 2026, which began on November 1, the company said on Tuesday. HP had about 58,000 employees as of October 2024, Bloomberg reported.

 

Nearly three years ago, the PC maker unveiled a different cost-cutting programme aimed at reducing 4,000 to 6,000 jobs. At the time, the company employed 61,000 workers and said that the plan resulted in gross savings of $2.2 billion. 

Chip prices curb earnings

 

Profit for the year, excluding items such as restructuring charges, is expected to be between $2.90 and $3.20 a share. Analysts, on average, had projected $3.32. HP expects earnings per share, excluding items, of 73 to 81 cents in the period ending January, compared with analysts’ average estimate of 78 cents.

 

Demand for artificial intelligence-enabled personal computers has continued to grow, accounting for more than 30 per cent of HP’s shipments in the fourth quarter ended October 31.

 

A global surge in memory chip prices, driven by rising demand from data centres, could increase costs and pressure profits at consumer electronics makers such as HP, Dell and Acer, Morgan Stanley analysts have warned.

 

The shortfall is due to rising memory chip costs, which are offsetting the benefits of a PC sales cycle. HP has enough inventory to reduce 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,” Lores said. These steps include adding more memory suppliers, reducing memory in products where customers do not require it and raising prices when necessary.

 

HP has been cutting costs and shifting manufacturing for almost all products sold in North America to facilities outside China to mitigate tariffs. Now, as customers replace older PCs and adopt new AI features, the company is facing rising memory prices.

 

In the fiscal fourth quarter, which ended on October 31, HP reported a 4.2 per cent rise in sales to $14.6 billion. Profit, excluding some items, was 93 cents a share. Analysts, on average, had expected adjusted earnings of 92 cents a share on revenue of $14.5 billion.

 

Revenue in HP’s PC unit increased 8 per cent, driven by customers upgrading to Windows 11 machines and growing interest in AI PCs with specialised chips.

 

Sales in the printer unit fell 4 per cent to $4.27 billion, matching estimates. 

Job cuts continue

 

Recently, Apple joined the list of companies that eliminated jobs as part of a major reorganisation of its sales division. The company handed out pink slips to dozens of employees globally. The current round of cuts comes after an earlier phase in Australia and New Zealand, where nearly 20 roles were slashed.

 

Across the broader technology sector, workforce reductions continue. Amazon Inc recently announced plans to cut more than 14,000 jobs, and Meta Platforms Inc has trimmed several hundred roles within its AI operations.

 

Amazon is undertaking one of its most significant restructuring efforts to date. As reported by Reuters, the company has shed roughly 30,000 corporate positions as it looks to rein in expenses following a surge in hiring during the pandemic years.

 

Although Amazon’s global workforce stands at about 1.55 million, the latest cuts affect close to 10 per cent of its 350,000 corporate employees. This makes it the company’s biggest round of layoffs since the 27,000 positions eliminated across late 2022 and early 2023.