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HP eliminates up to 9,000 jobs in CEO's new restructuring plan



Incoming

HP Inc.

general manager

Enrique Lores

In a restructuring plan that also aims to get the declining printer sales back on track, HP wants to force changes on the computer hardware vendor.

HP announced Thursday that 7,000 to 9,000 jobs could be cut by about 55,000 employees over the next three years. The cutbacks are expected to result in annual savings of approximately $ 1 billion, the company said at its annual meeting of securities analysts. HP is nearing the end of a three-year redundancy plan that could reduce up to 5,000 jobs.

HP has been under pressure in recent quarters as its print business, which was once the biggest money-earner, has declined. To stimulate growth again, new sales opportunities for its products are to be created.

Before the printer business encountered difficulties, HP had since experienced stronger growth than expected

Hewlett-Packard Co.

In 201

5, the company that founded Bill Hewlett and Dave Packard in their 1939 garage in Palo Alto, California split up.

Hewlett Packard Enterprise Co.

, which focuses on the sale of computer servers, data storage devices and other enterprise technology services, has been widely recognized as the company with more promising growth prospects.

Despite a decline in industry-wide PC sales since 2015, HP has expanded its market share, even as its overall shipments continue to decline

Gartner Inc.

Mr. Lores, who has led the HP printer business since the split, was named successor to the CEO in August

Dion Weisler,

He said he left the company for family reasons.

HP sold printers at a discount in the past, and then made money with ink cartridges, much like companies that sell razors at a discount and make their profits with the blades. "This model made sense when the goal was to open up more homes and offices to consumers," said Mr. Lores, who will act as CEO on November 1st.

But the habits of users have changed. Customers have begun to buy their ink cartridges from other, cheaper suppliers, and have become more cautious in their choice of documents to print, which has a negative impact on HP's business.

HP is changing the distribution model. It continues to offer customers the opportunity to buy their discounted printers, but then locks them up to buy ink from HP. It is no different than smartphones that are "tied" to a particular service provider. Customers may also choose to purchase printers at a higher price, allowing them to use third-party ink cartridges, Mr. Lores said, assuming an initial $ 100 million charge during the period associated with the new restructuring plan is.

The cuts, according to corporate executives, would allow them to redirect additional cash through a combination of higher dividend payouts and stock returns into growth areas and shareholder returns.

In the short term, however, the restructuring will weigh on the company's results. On Thursday, corporate executives said they expect a share price of $ 1.98 to $ 2.10 for the fiscal year ended October 31, 2020, below the $ 2.18 forecast by FactSet Other positions projected company earnings for $ 2.22 to $ 2.32 per share, compared to $ 2.24 per analyst share.

Write to Maria Armental at [email protected]

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