The PC market slowdown weighs heavily on all PC makers, and HP plans to cut up to 4,000 jobs to help balance costs against sluggish demand.
The company recently unveiled its Spectre x360, Envy 13 and Envy AIO 27, going all in with premium devices to turn things around amid a slowing PC market.
As promising as the devices are, however, HP is still looking to cut 3,000 to 4,000 jobs over the next three years to lower costs and bring them in line with decreasing demand for PCs and printers.
According to HP CEO Dion Weisler, the layoffs will target positions across the board. If the number is edging closer to 4,000 job cuts, roughly $1,000 of those could be outsourced, added CFO Cathie Lesjak, as Bloomberg reports.
Following HP's separation from Hewlett Packard Enterprise last year, Weisler is keen on finding new ways to drive profitability for the PC business. HP announced back in 2015 that it needs to cut roughly 3,000 jobs over three years, and earlier this year the company reiterated its commitment to that plan and said it needs to accelerate it. HP currently has about 50,000 workers, but the upcoming layoffs aim to improve efficiency and drive profitability.
"As technology improves and as we become a faster, nimbler company, you are always looking to become more and more efficient," says Weisler. "Efficiency wins the day. And when I think about the markets that we're in, what's important is that we remember to stay focused on the reinvention, the innovation that we're driving."
After the announcement, HP's shares dropped 1.8 percent in extended trading, but that's no big surprise. The company's shares had already slipped 1.3 percent earlier, reaching $15.15 at the close in New York, although the stock saw a 28 percent increase this year.
The new round of layoffs will allow for substantial cost savings of between $200 and $300 million annually starting in fiscal year 2020, HP notes. Before seeing those savings, however, the company expects to see charges of $350 million to $500 million related to this strategy. Roughly $200 million of that sum will be incurred in labor costs, according to a regulatory filing.
The company also adjusted its forecast for the fiscal year 2017, anticipating profit per share between $1.55 and $1.65 in the year ending next October. Lastly, the company is also increasing its planned quarterly dividend to 13 cents a share, marking a 7 percent boost.