HP Inc. Announces Major Workforce Reduction Amid Industry Shifts
In a move to adapt to evolving market dynamics, HP Inc. has announced plans to reduce its workforce by 4,000 to 6,000 employees by the end of fiscal year 2028. This decision is part of a restructuring initiative aimed at saving $1 billion annually, as the company grapples with rising costs and shifting customer priorities.
AI Hardware Boom Drives Memory Prices Skywards
The surge in demand for AI-capable PCs has significantly impacted memory chip costs, which have jumped approximately 30 cents per share. CEO Enrique Lores revealed that memory components now comprise 15-18% of total PC production costs, prompting the company to explore cheaper suppliers and optimize configurations to manage expenses.
PC Sales Grow While Printer Revenue Declines
HP’s personal systems division reported an 8% increase in PC sales, generating $10.4 billion in revenue. This growth was fueled by businesses upgrading to Windows 11 and demand for AI-powered devices. Meanwhile, printer revenue fell by 4% to $4.3 billion, reflecting delayed purchases and competitive pricing. In response, HP aims to integrate AI features into its printing products to attract customers and stay competitive.
Financial Outlook Falls Short
Despite posting better-than-expected Q4 earnings with $14.64 billion in revenue, HP issued a weaker full-year fiscal 2026 earnings guidance ranging from $2.90 to $3.20 per share, missing analyst predictions of $3.33. This caused HP stock to drop 6% in after-hours trading.
Looking Ahead
HP plans to leverage AI-powered tools across its operations to boost efficiency and product innovation. The restructuring and strategic shifts aim to realign the company to capitalize on the AI revolution and tackle the challenges of rising costs in the tech industry.
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