In response to decreased personal computer demand that has reduced profitability, HP Inc. announced it would terminate 6,000 positions over the next three years. According to a statement released on November 22, 2022, by Palo Alto, California-based HP, earnings for the fiscal year ending in October 2023 will range from US$3.20 to US$3.60 per share, excluding certain items. The amount of free cash flow will be roughly US$3.25 billion, which is less than anticipated.
Apparently, the total revenue increased slightly, and net profit declined significantly in the third quarter, which ended in October 2022, compared to the previous quarter, as reported by the company.
A 10% fall in computer sales is predicted in the fiscal year. HP has been coping with a persistent decline in the market for personal computers, which accounts for most of its revenue. As businesses cut back on employee numbers and technology spending, it started with lower-end consumer goods and has since spread.
The third quarter saw an almost 20% loss in global PC shipments, the most significant drop since the company started monitoring the statistic in the middle of the 1990s. On Monday, Dell Technologies Inc., which gets 55% of its income from selling PCs, provided a gloomy prediction for the current quarter and mentioned that some customers have "paused purchases" soon.
HP will decrease its real estate footprint and remove up to 10% of its 61,000 global employees over the next three years to control costs. Restructuring costs for the corporation will total nearly $1 billion, with roughly 60% of those costs falling in the fiscal year 2023, which started this month, November 2022. The proposal should save as much as US$1.4 billion a year by the end of the fiscal year 2025. After closing at US$29.38 in New York, shares experienced a slight decrease of around 1% in extended trading. The stock price has decreased by 22% this year, 2022.
HP, which also manufactures printers, plans to invest in fresh markets, including subscription services. The company will also investigate possibilities for other products, including printer paper and computers, in addition to its current ink subscriptions. Revenue for the fourth quarter of the fiscal year fell 11% to $14.8 billion. Eighty-five cents per share in profit, excluding certain adjustments, also exceeded expectations.
Revenue in the Personal Systems Group, which comprises the computer industry, dropped 13% to US$10.3 billion, with a 25% decline in consumer revenue being the main driver. Sales in the Printing sector decreased by 7% to US$4.5 billion, exceeding expectations.
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