HP announces job cuts as profit outlook falls short of estimates

"HP Inc. gave a profit outlook for current year that fell short of estimates and the company said it will cut 4,000 to 6,000 employees through fiscal 2028 by using more AI tools. The PC and printer maker will exit 2028 with gross savings of $1 billion annually as a result of the cuts. The savings will come from HP applying AI tools to areas like product development, customer support, sales and manufacturing, Chief Executive Officer Enrique Lores said in an interview. It's something we have to do to make sure the company stays competitive, he said."

"The shortfall stems from rising costs for the memory chips that go into computers, a jump which is blunting the benefits of a sales cycle for PCs. HP has enough inventory to limit the impact in the first half of the year. For the second half, we are taking a prudent approach to our guide, while at the same time we're implementing aggressive actions like bringing on more memory suppliers, putting less memory in products where it isn't needed by customers and raising prices when necessary, Lores said."

HP projected adjusted full-year EPS of $2.90 to $3.20, missing analysts' $3.32 average, and guided quarterly EPS at $0.73 to $0.81 versus a $0.78 consensus. The company plans to reduce its workforce by 4,000 to 6,000 employees through fiscal 2028 and expects gross annual savings of $1 billion by applying AI across product development, customer support, sales and manufacturing. Restructuring charges are estimated at about $650 million, with roughly $250 million in fiscal 2026. Rising memory chip costs are pressuring margins; inventory buffers, additional suppliers, product memory adjustments, price increases, and manufacturing shifts aim to mitigate impacts.

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