HP disappointed with its profit forecast and announced layoffs of up to 6,000 people. Shares fell

Computer and printer maker HP gave a weak profit forecast for the current fiscal year and announced plans to cut 4,000 to 6,000 employees by the end of fiscal 2028 by introducing AI tools. The manufacturer is facing rising memory chip prices and is forced to shift production from China to reduce the cost of duties in the US. HP shares collapsed by more than 5% on the postmarket after the reports were published.

HP expects adjusted earnings per share in fiscal 2026, which began Nov. 1, to be between $2.9 and $3.2. Analysts had forecast earnings to reach $3.32, Bloomberg writes. HP expects earnings of $0.73 to $0.81 per share for the current quarter, compared with the Wall Street consensus forecast of $0.78. The manufacturer attributes the weak outlook to rising prices of memory chips used in computers. This undermines the positive effect of the beginning of the cycle of personal computer upgrades due to the emergence of AI functions, the agency notes.

Investors reacted to the disappointing forecast by selling shares. In the evening trading after the publication of reports on November 25, securities fell in price by 5.1%, to $23.1. Since the beginning of the year, HP shares have lost more than a quarter of their value.

The company assures that there are enough component inventories to smooth out the impact of prices in the first half of the year.

"In the second half, we will be cautious in our outlook, but will launch aggressive measures: expanding the memory vendor pool, reducing memory in devices where it is not critical to the customer, and raising prices where warranted," HP CEO Enrique Lores said in a press release.

HP also continues to cut costs. For example, the PC maker is moving production of goods sold in the U.S. outside of China to reduce the impact of duties.

By 2028, HP expects to save $1 billion annually through staff reductions: 4,000 to 6,000 employees will be laid off. According to Lores, this will be achieved by introducing AI tools in such areas as product development, customer support, sales and production. "This is a necessary step to keep the company competitive," he noted.

The cuts will result in a one-time cost of $650 million, of which $250 million will be incurred in fiscal year 2026. As of October 2024, HP had about 58,000 employees.

This is not the first such plan, Bloomberg notes. Three years ago, the company has already launched a program with a similar scale of cuts - from 4 thousand to 6 thousand people. Then HP had about 61 thousand employees. The savings from that program amounted to $2.2 billion.

HP's revenue rose 4.2% year-over-year to $14.6 billion in the fourth quarter of fiscal 2025, which ended Oct. 31. Adjusted EPS fell 3.1% to $0.93. Both values were slightly above Wall Street's expectations.

The Personal Systems division, which makes PCs, reported revenue growth of 8% year-on-year to $10.4 billion, driven by demand for Windows 11 PCs and consumer interest in AI devices with specialized chips. By contrast, sales at Printing, which produces printing equipment, fell 4% to $4.3 billion.

This article was AI-translated and verified by a human editor