PC and printer maker HP is set to cut as much as 10% of its 61,000-employee global workforce over the next three years. They will do this as a result of declining demand for personal computers (PCs), which has reportedly affected the company's profits, a report by Bloomberg said.
The company's earnings report expects a 10% decrease in computer sales in the fiscal year, according to its Chief Executive Officer Enrique Lores. "We expect a challenging market environment," he said.
Initially, the lowered demand for PCs that HP was experiencing only started with lower-end consumer products. However, according to Lores, the demand worsened ever since companies started reducing their workforces and curbing technology investment.
According to technological research and consulting firm Gartner, worldwide PC shipments totaled 68 million units in the third quarter of 2022, a 19.5% decrease from the third quarter of 2021. This is the steepest market decline since the company began monitoring the PC market in the mid-1990s and the fourth consecutive quarter of year-over-year decline. During the third quarter of 2021, HP shipped 17,622 devices. In the same period in 2022, however, this number declined to 12,706.
PC shipments grew by 55% in 2021 as people bought computers to work or go to school from home as a result of the COVID-19 pandemic. However, this declined sharply in the first quarter of 2022, signaling that that the pandemic boom in PC sales is over.
HP will spend around $1 billion in restructuring charges, with about 60% in fiscal year 2023. By the end of fiscal year 2025, the company aims to save as much as $1.4 billion a year.
As the PC market continues to decline, HP will look to invest into new lines of businesses like subscription services. Lores said that the company will also explore plans for other products, such as printer paper.
Source: Bloomberg (paywall)