Wall Avenue’s Worth of the Day – HP Inc: As much as 6,000 job cuts on the horizon – 11/23/2022 at 4:28 p.m

(AOF) – Amid a declining PC market, HP Inc has become the latest tech company to announce job cuts. Before her, Meta, Cisco, Twitter and even Amazon announced job cuts. On the stock exchange, the PC and printer manufacturer’s action rose by 0.27% to $29.46. HP will shed between 4,000 and 6,000 jobs by the end of fiscal 2025 to save at least $1.4 billion annually. Last year, HP Inc employed 51,000 people.

This restructuring will cost around $1 billion in restructuring costs, with $0.6 billion in the current fiscal year 2023 and the rest in the following two. HP Inc faces a weak PC market.

According to market research firm IDC, the PC market is expected to decline 12.8% to 305.3 million units this year and continue to shrink next year. “The weaker global economy and increased purchasing over the past two years are the main drivers behind the outlook downgrade,” IDC said. The rise of telecommuting during the pandemic had indeed encouraged PC purchases.

For the fourth quarter ended October, HP Inc reported a net loss of $2 million compared to a profit of $3.1 billion a year earlier. Excluding special items, the group posted earnings of 85 cents per share, beating consensus by 1 cent.

Revenue fell 11.2% to $14.8 billion from the market forecast of $14.69 billion. In detail, PC revenue fell 13% (-9% at constant exchange rates) to $10.3 billion. In particular, sales of consumer PCs fell by 25%.

HP Inc.’s printer activity saw sales decline 7% (-6% at constant exchange rates) to 4.5 billion.

For fiscal 2023, the PC and printer maker is targeting adjusted earnings per share of between $3.20 and $3.60 per share. Wall Street is targeting $3.61 per share.


The lucrative database market

This mature global market is expected to generate more than $40 billion in revenue this year, according to IDC, compared to $22 billion in 2017. Contrary to initial ambitions, SAP failed to dethrone Oracle. This is mainly due to major developments in this market with the emergence of Amazon Web Services or Google Cloud. These players enjoy a significant competitive advantage as enterprise data hosters and have gained significant market share in recent years. However, with companies’ growing appetite for high-value data, traditional players have a card to play.

Maximum staff turnover

Companies in the IT service industry have left more than 20% of their workforce within twelve months. This trend is not uncommon in the industry but is reaching unprecedented proportions given the strong growth and good hiring momentum. In addition, there are new requirements and wishes for the employees. The main criterion is the flexibility of the work and its implementation in the company. At the American-Indian company Cognizant, around 35% of its 330,000 engineers left the company in one year. Capgemini, which brings together 32,000 French employees, recently suffered its first strike since 2008 demanding a collective pay rise.

New ambitions from Samsung and Huawei on the market

Samsung recently unveiled four new laptops after withdrawing from operations outside of Korea in 2015. For his part, earlier this year, given the American sanctions that have penalized its smartphone activities since 2019, the founder of Huawei urged his employees to accelerate the diversification of the group. The Chinese giant recently showed its ambitions in the PC/tablet market, which is one of the pillars of this strategy. To do so, it must compete with Lenovo in China and, most importantly, gain market share in the United States and Western Europe, markets notoriously difficult to penetrate.

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