Post by : Badri Ariffin

On Tuesday, HP Inc unveiled a substantial restructuring initiative that aims to eliminate between 4,000 and 6,000 jobs internationally by fiscal 2028, representing one of the firm’s most significant workforce adjustments in recent years. The announcement resulted in an immediate downturn for HP shares, which fell by 5.5% during after-hours trading.

The job reductions will affect various divisions, including product development, internal operations, and customer support, as the company strives for a more efficient model and greater integration of artificial intelligence throughout its operations. This transformation is focused on accelerating product development, enhancing customer interactions, and boosting overall productivity in the long run.

HP anticipates that this restructuring phase will yield $1 billion in gross run-rate savings over the next three years. Earlier this year, the company had already reduced its workforce by an additional 1,000 to 2,000 positions under a previously detailed plan.

Growing Demand for AI amid Rising Costs

The demand for AI-capable PCs continues to rise, now accounting for over 30% of HP’s shipments in the quarter ending October 31. However, along with the opportunities AI presents, increasing prices for memory chips are posing new challenges for PC manufacturers.

A global rise in DRAM and NAND prices, spurred by fierce competition to establish AI data centers, is projected to raise hardware costs for firms such as HP, Dell, and Acer. HP has indicated that it expects to feel the most significant impact in the latter half of fiscal 2026, but it claims to have sufficient inventory to weather short-term price fluctuations.

In response to the anticipated cost increases, the company is working to qualify lower-cost suppliers, optimize memory configurations, and adjust its pricing as needed.

Revenue Surpasses Projections, But Guidance Falls Short

HP reported revenues of $14.64 billion for the fourth quarter, slightly surpassing market expectations. Nonetheless, the company’s profit outlook fell short of what investors had hoped.

For fiscal 2026, HP predicts adjusted earnings per share to be in the range of $2.90 to $3.20, which is below analysts’ forecasts. The company’s first-quarter guidance of 73 to 81 cents per share also aligns with the lower end of expectations.

This latest overview lays out a demanding trajectory ahead for HP, as it seeks to balance rising component costs with an extensive operational transformation while addressing the quickening demand for AI-powered devices—all against a backdrop of uncertain global tech investments.

#Business News #Economy