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Will HP Stay In PC’s? As Company Moves To Sack 9,000 As They Struggle With Margins

Shares of PC maker Hewlett Packard have slumped close to 10% after the #1 PC brand in Australia announced that they are set to sack up to 9,000 people worldwide with many questioning whether they should actually be in the PC market.

Former CEO, Apotheker publicly questioned whether HP should be in the PC business due to poor returns and their printer business has been described as a “melting ice cube” as sales gradually decline.

Despite the concerns the board eventually decided to stay in the sector vying with Lenovo Acer and Dell as well as Microsoft for market leadership and despite selling tens of millions of units a year, the market is low margin (under six per cent in HP’s case) and looks to be at risk of a long-term decline.

In Australia the Company has been splashing the cash with retailers to try and boost sales in retail stores.

Now staff in Australia are “concerned about their employment prospects” claims HP insiders with between 7000 and 9000 jobs to go by the end of fiscal 2022.

A portion of those employees are expected to accept voluntary payouts.

the layoffs, which will account for 16 per cent of current headcount, are not some isolated incident.

Twice in the past 12 years, the company has moved to mass sack people when sales have slumped, or margins have been squeezed.

The latest layoffs are part of a broader restructuring plan to shave $1 billion a year from HP’s bottom line by the end of fiscal 2022 and will involve a $1 billion restructuring hit.

Shares slipped over the weekend to reach a new low for the year of $16.46 before closing at $16.64.

Analysts at Citi have forecast “turbulence ahead” for the Company and its stock. Many firms wrote that there was elevated execution risk as a result of the restructuring claims Bloomberg.

The stock fell as much as 9.4% and was trading at its lowest since February 2017. HP has already dropped more than 36% from a peak in October 2018.
The job cuts represent “largest workforce reduction by HP since its separation in 2015 and this could be a distraction for the company.”

During the past 20 years the Company has gone through CEO after CEO in an effort to fix their problems.

The rein of Carly Fiorina, later a political figure, was stormy and featured boardroom clashes and a controversial decision to buy Compaq. Mark Hurd, who was well respected for his work at NCR and Teradata, appeared to be righting the ship before being forced to resign over a disagreement with the board claimed IDC.

(Oracle then CEO Larry Ellison immediately hired Hurd and accused HP’s board of making the “the worst personnel decision since the idiots on the Apple board fired Steve Jobs many years ago”.)

Ex-SAP executive Leo Apotheker had a brief, tumultuous stay, including the acquisition of Autonomy that remains the subject of a legal battle. Former eBay CEO and another sometime politician Meg Whitman oversaw the splitting of HP into two companies: HP Inc. with PCs and printers and HP Enterprise for business technology, servers and services.

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