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HP Inc makes job cuts to focus on sustainable business growth

HP Inc reveals the challenges it faces in 2017 with PCs, printers and the 3D printing opportunity

HP Inc announced its fiscal 2017 outlook with a message to tackle operational costs, which will lead to up to 4,000 job losses by 2020 in a bid to save $200m to $300m annually.

The job cuts come at a time when HP Inc is trying to attract investors. The company hopes to focus on reducing operational costs to enable it to deliver sustainable long-term business growth and innovation.

It stated it would be returning 50% to 75% of annual free cash flow to shareholders through a combination of a robust dividend and regular share buybacks. It also plans to increase its quarterly dividend amount by 7%.

During the company’s security analyst meeting on 13 October 2016, Dion Weisler, president of HP Inc, said: “We are reinventing everything. We are confident in our strategy and believe it will continue to produce reliable returns and cash flow, while also enabling HP to invest in differentiated innovation and long-term growth.”

Speaking about the split from HP, he said: “Separation would enable us to focus and accelerate and respond to competitive changes quicker. With personal systems we are having a lot of fun, taking share from competitors where we choose to play.

“We are also delivering incredible innovations such as the award-winning X3 and Spectre 13, the world’s thinnest laptop.”

The company is also looking to capture the industrial 3D-printing market, which is worth $12tn, according to Weisler.

The company’s JetFusion 3D printer is being introduced into 11 countries. During a demonstration of 3D-printing technology earlier in 2016, the company discussed how industries, such as automotive and aerospace, could make use of 3D printing for prototyping and manufacturing components for production.

Auto firm BMW hopes 3D printing will enable it to increase the level of customisation it can offer customers.

Printing 3D parts on demand also reduces the overhead of warehouse inventory and transportation costs required to get the parts to where they are needed. The CAD schematic of the part could be printed directly by a manufacturer’s customer or a local supplier, which would speed up delivery.

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However, HP Inc faces numerous challenges in its traditional business areas of PCs and printers.

As Computer Weekly has previously reported, analyst Gartner recently stated that the three months to September saw year-on-year PC shipments drop by 5.7%, with a total of 68.9m devices sold, in the wake of ever-lengthening device refresh cycles and softening demand for machines in emerging markets.

The strong dollar and Brexit are also having a big effect on the corporate market, given the very real prospect that PC prices will increase and IT budgets will remain either static or will be cut during 2017.

Weisler also warned: “This is a volatile market facing challenges.”

He said the company has made $1bn in savings since the separation and the acquisition of Samsung’s printer business would accelerate the company’s drive into the A3 copier market.

“Although our markets remain very challenged, we are committed to innovating in the core and continue to see long-term growth opportunities in commercial mobility and services, the disruption of the A3 copier market, and the digitisation of manufacturing though our leading 3D printing products,” said Weisler.

Cathie Lesjak, chief financial officer at HP Inc, added: “In the fiscal year 2017, the market will be volatile. We will need to continue to reduce cost structure while investing in growth opportunities, and we will continue to manage business in the long term.”

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