Analysts at CMC Markets UK noted that HP Inc (NYSE:HPQ) shares have risen after the company announced sweeping layoffs over the next three years, as the PC market struggles with weakening demand.
The Palo Alto, California-based computer maker, which currently has around 61,000 employees, revealed that it plans to cut 4,000 to 6,000 employees over the next three years.
While announcing its fiscal fourth quarter results, HP said that its “Future Ready Transformation plan” should result in annualized gross run rate savings of $1.4 billion or more in the next three years. The cuts and other changes will come with about $1 billion in upfront costs, HP said.
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HP shares rose nearly 1% to $29.66 on the tech-dominated Nasdaq at noon on Wednesday.
HP announced the layoffs as the computer giant reported an 11.2% drop in revenue to $14.8 billion for the 4Q, which ended on October 31, 2022, compared to $16.7 billion in the same quarter a year earlier.
“In the 3Q, revenues came in well below expectations due to weaker demand for PCs and its Q4 numbers have also disappointed, revenues coming in at $14.8 billion, although profits did beat slightly at $0.85 cents a share,” said Michael Hewson, chief market analyst at CMC Markets UK.
“For the new fiscal year 2023, the company offered an uncertain outlook with 1Q profits expected to come in at $0.70 cents a share, and full-year adjusted EPS between $3.20 and $3.60 cents a share.”
During the quarter, HP returned $1 billion to shareholders in the form of share repurchases and dividends. The company announced a dividend increase of 5%.
Meanwhile, HP rival Dell also suggested the lull in PC buying this year would continue after a surge early in the pandemic.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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