HP slashes workforce as it restructures

HP is to cut 7,000 - 9,000 staff as it restructures “to simplify its operating model and become a more digitally enabled company”.

At the 2019 Securities Analyst Meeting, where the company provided details on its strategy for long-term growth along with its financial outlook for 2020, incoming president and CEO Enrique Lores said: “We are taking bold and decisive actions as we embark on our next chapter.” The company expects to significantly cut global headcount through a combination of employee exits and voluntary early retirement. It estimates that it will incur total labour and non-labour costs of approximately $1bn in connection with the restructuring and other charges, with approximately $100m in fiscal Q4 of 2019, $500m in fiscal 2020 and the rest split between fiscal 2021 and 2022. These actions are expected to be completed in fiscal 2022. HP estimates that these actions will result in annualised gross run rate savings of about $1bn by the end of fiscal 2022. For the 2020 financial year, HP estimates GAAP diluted net EPS to be in the range of $1.98 to $2.10 and estimates non-GAAP diluted net EPS to be in the range of $2.22 to $2.32. Fiscal 2020 non-GAAP diluted net EPS estimates exclude $0.22 to $0.24 per diluted share, primarily related to restructuring and other charges, acquisition-related charges, defined benefit plan settlement charges, amortization of intangible assets, non-operating retirement-related (credits)/charges, tax adjustments and the related tax impact on these items. Based on the current environment, HP anticipates generating free cash flow of at least $3bn for fiscal 2020. In fiscal 2020, the company indicated that it expects to return at least 75% of free cash flow, with a 10% increase in the planned quarterly dividend amount, and the balance returned to shareholders through share repurchases.