One of the world’s leading manufacturers of personal computers, HP Inc., has announced that they will be implementing job cuts that will see its worldwide workforce reduced by close to 16%. The US computer manufacturer says that these job cuts are part of larger restructuring efforts that are being implemented by the company in a bid to cut operational costs.
Thousands to lose jobs
HP currently employs about 55,000 people across the world, according to documents filed by the firm with the US Securities and Exchange Commission (SEC). Of these 55,000, between 7,000 and 9,000 jobs will be cut. The company plans on using voluntary early retirement and employee exits as some of the methods through which the job layoffs will be achieved. The tech giant estimates that these job cuts will save them close to $1 billion by the end of the 2022 financial year.
Enrique Lores, HP’s incoming CEO, said that they are taking this decisive action to prepare the company for its next chapter. The restructuring will see the company incur charges of close to $1 billion according to their calculations. $100 million of this amount will have been realized by the time the firm’s fourth-quarter earnings are reported.
Lores added that they see this as an opportunity to create shareholder value, and they will accomplish this by staying ahead as industry leaders and changing the way their company works. Lores is due to take over as the company’s CEO on the 1st of November, 2019.
Further steps to improve shareholder value
HP’s board has recently approved a $5 billion share buyback scheme. The buyback was approved on the 30th of September, and it is meant to be a part of the company’s restructuring program. The US computer manufacturer says that they expect to generate at least $3 billion in cash flow by the 2020 fiscal year. If they manage to achieve this, they will be able to give shareholders a 75% return through a 10% increase of quarterly dividends and share buybacks.
If they are successful, HP will see its earnings increase from $2.22 to $2.32 per share by 2020. In the current fiscal year, shareholders can expect an increase between $2.18 and $2.22, according to HP’s report on its third-quarter earnings.
The company’s shares have dropped by close to 10% this year, and they will be hoping that the restructuring efforts they are currently engaged in will have a positive effect on the share price. HP shareholders will be looking at these developments positively, and with Lores coming on board at the helm, things may be taking a turn for the good.