HP said Tuesday it expects to cut up to 6,000 jobs by the end of fiscal 2025, or about 12% of its global workforce, at a time when sales of personal computers and laptops are sliding as shoppers tighten budgets.
The PC maker also forecasts a lower-than-expected profit for the first quarter as it expects softness in both consumer and commercial demand.
“Many of the recent challenges we have seen in FY’22 will likely continue into FY’23,” said chief financial officer Marie Myers during a post-earnings call.
HP estimates it will incur about $1.0 billion in labor and non-labor costs related to restructuring and other charges, with nearly $600 million in fiscal 2023 and the rest split between the following two years.
The company, which employs nearly 50,000 people, said it expects to reduce headcount between 4,000 and 6,000.
The restructuring comes at a time when most companies including Amazon, Facebook’s parent Meta Platforms and Cisco Systems are making deep cuts to their employee base to navigate a potential downturn in the economy.
HP forecast current-quarter profit between 70 cents and 80 cents. Analysts on average expect 86 cents, according to Refinitiv data.
PC sales have shrunk from the heights hit during the pandemic as households and businesses reduce spending in the face of decades-high inflation, putting pressure on companies such as HP and Dell Technologies.
Earlier on Monday, Dell reported a 6% fall in third-quarter revenue. The company’s chief financial officer Tom Sweet said the ongoing macroeconomic factors including inflation and rising interest rates would weigh on customers next year.
HP also reported an 11% fall in fourth-quarter revenue to $14.8 billion.
Shares of the Palo Alto, Calif.-based company were up nearly 2% in extended trading.