This week, Hewlett-Packard (HP) announced it would trim its workforce by 3,000 to 4,000 positions by 2020. The U.S. tech giant explained the layoffs would help it make some savings despite a weak demand for printers and personal computers.
HP Chief Executive Officer Dion Weisler broke the news Thursday during the company’s analyst meeting in New York City. The restructuring process could mean the company outsources about 1,000 jobs, if the layoffs reach the 4,000 limit.
We learned about the outsourcing plans from the firm’s CFO Cathie Lesjak.
Weisler explained the U.S. tech giant is looking for new methods to boost its profits in the wake of the split between the company’s personal computer arm and Hewlett Packard Enterprise. HP Entreprise is mainly focused on producing and selling equipment for corporations.
Weisler had announced this move earlier this year, when he unveiled HP would want to accelerate a 2015 plan to cut about 3,000 jobs in three years’ time. Apparently, the layoffs will start this fiscal year. The Palo Alto, Calif.-based company currently employs 50,000 workers.
But Lesjak was the first to announce the plan. In Sept. 2015, she told analysts HP will cut 3,300 jobs in the next three years. She added the first 1,200 jobs will be restructured this year.
Earlier that year, HP disclosed Hewlett Packard Enterprise would also shed between 25,000 and 30,000 positions following the November 2015 breakup.
In a recent interview, Weisler disclosed the company is now more focused on boosting efficiency. He added that as the technology improves, HP also gets nimbler and faster.
“Efficiency wins the day,”
He also said it was important to remain focused on innovation and constant reinvention. But following the announcement, the company’s shares dropped 1.8 percent in New York. Since the start of the year, HP shares climbed 28 percent.
HP also said the latest job reductions would help it save from $200 million to $300 million every year. But these savings will start in the fiscal year 2020. According to a recent filing, under the new plan the hardware maker will take up to $500 million in charges, of which 200 million will be costs connected to the workforce.
Nevertheless, this is not the company’s first turnaround plan. In the late 90s it spun off its arm that produced medical products and measurement devices. The move led to a string of super mergers over the next decade including multi-billion-dollar Compaq and Autonomy acquisitions.
In 2011, former HP CEO Meg Whitman described very clearly the company’s challenges at the time. In a Fortune interview, she said the firm “was in the midst of an existential crisis.” Reportedly, HP was ‘under siege’ losing market share extensively. That year, HP’s profits sank 19 percent from a year prior. At the time, Whitman put the blame on another former CEO, Leo Apotheker, and a string of ill-fated decisions.
But now the company hopes the new plan would adjust profit per share next year around $1.55 to $1.65. Analysts project $1.61 for 2017.
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