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HP Inc. on Thursday announced a major restructuring that will eliminate 7,000 to 9,000 jobs over the next three years as part of a series of moves to transform the computing giant into a software and services powerhouse.
"This is one of the toughest decisions we had to make, but it is absolutely necessary for HP's future," incoming Chief Executive Enrique Lores told MarketWatch in a conference call with a handful of industry analysts. Lores and Chief Financial Officer Steve Fieler laid out a financial road map for the company's fiscal year 2020 several hours before HP's analyst day was to start.
The boldest move is a job reduction of up to 13% to 16% of HP's 55,000 employees worldwide to save $1 billion in operation costs. Those savings, in turn, would be invested in software and services as HP attempts to "reinvent business,". Those savings, in turn, would be invested in software and services as HP attempts to "reinvent business," Lores said.
HP shares slid 3% at $17.83 in after-hours trading Thursday.
Additional reporting at ZDNet.com.
Affected employees will be let go through a combination of employee exits and voluntary early retirement, HP said.
To be completed by fiscal 2022, the restructure, according to HP, will cost the business a total of approximately $1 billion, with approximately $100 million in 4Q19, $500 million in fiscal 2020, and the rest to be split between fiscal 2021 and 2022.
The company also estimates that the restructure will result in annualised gross run rate savings of about $1 billion by the end of fiscal 2022.
The announcement comes as part of HP's outlook for fiscal 2020, which estimates that its generally accepted accounting principles (GAAP) diluted net Earnings Per Share (EPS) will be in the range of $1.98 to $2.10. It also estimates that non-GAAP diluted net EPS will be in the range of $2.22 to $2.32.
Based on the current environment, HP said it anticipates generating free cash flow of at least $3 billion for fiscal 2020.
(Score: 5, Insightful) by Rupert Pupnick on Friday October 04 2019, @01:13PM (6 children)
So the once proud and mighty HP is joining the ranks of Me Too software and services companies like IBM.
This is part of an overall trend in the last few decades of product feature sets living in software rather than in hardware. Cheap and abundant computing power means that most hardware functions are available in commodity platforms, which in turn means that the demand for hardware expertise is leveling off. Of course, there will always be a need for hardware engineering, but most of the work will be in power supplies, packaging and thermal/noise management. PCB design today is mostly plunking down a few chips with high pin counts and lots of interconnect along with supporting board level power supplies and regulators.
In an age where you can't open up most gadgets to see how they work like you could when I was a kid, I often wonder where the next generation of hardware types are going to come from. I guess if there's less demand, it's good if there's less supply.
(Score: 1, Insightful) by Anonymous Coward on Friday October 04 2019, @01:43PM (2 children)
'makers'
ie. self-taught, since there won't be entry level full-time positions for them any more
(Score: 2) by Rupert Pupnick on Friday October 04 2019, @03:10PM (1 child)
There are still entry level full-time positions out there (I know, because my current employer is looking for them). It's just that there will be less demand, and the nature of the work will be less varied and contain less areas of deep specialization-- those are all migrating to the fields of study made possible by cheap computing (thinking mostly of AI type stuff, though FAANG companies owe their very existence to this trend). But you will always need hardware and hardware support to host physical systems. It's just yet another inevitable, technology driven labor market trend. But watch out for it if you're an up and coming "maker" thinking about entering the field as a full time profession.
(Score: 1, Interesting) by Anonymous Coward on Friday October 04 2019, @08:02PM
when I was studying electrical engineering in the early 90s, I saw the handwriting on the wall.
When I was taking a digital design class, I thought man for 1/10 of the time spent, I could implement this using a generic board with a microcontroller on it.
I knew the days of digital hardware were already declining back then.
by the way, I never worked a day in my life doing hardware. I went straight into software. The electrical engineering degree was completely useless.
(Score: 3, Interesting) by RS3 on Friday October 04 2019, @02:28PM
Yeah, but that's been going on for decades. I've never used Altium Designer, but I remember first reading about it and its features, and thinking "wow, cool", but then thinking "wow, that replaces a lot of people". Plus, it doesn't and can't do everything, and it was (is) designed by and for experienced engineers, so newbs make newb mistakes, but the older experienced engineers are either in management and meetings, or long gone. All that said, some companies are realizing this and are intentionally hiring "seasoned" engineers. There are still good hardware engineers out there, and coming into the workforce.
(Score: 0) by Anonymous Coward on Friday October 04 2019, @04:07PM
From a factory setting. [wikipedia.org]
(Score: 2) by barbara hudson on Friday October 04 2019, @07:59PM
Printers with embedded chips that, for example, disable all functionality when a certain number of copies have been made, telling you to replace the imaging unit when all you need to do is short out two contacts with a 55-ohm resistor to reset it (bad Samsung!) are just one example. Laptops with two HD controllers but no socket for a second drive connection on the mb (you can add one if you're brave, or just buy a new laptop) are something that needs to be addressed as an environmentally bad practice. Maybe an extra eco-tax for devices that aren't maintainable or expandable except through authorized centres.
So which of the two HPs is this? I thought they already split into an enterprise services and an everything else pair of businesses?
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