HP plans to cut up to 9,000 jobs as part of beleaguered technology company's restructuring plans

HP Inc (NYSE:HPQ) told investors on Thursday that the beleaguered technology company plans to cut up to 9,000 jobs over the next three years. 

The plan is part of a restructuring program aimed at cutting costs as the Palo Alto-based company, known for its printers and computers, looks to save nearly US$1 billion by the end of fiscal 2020.

Incoming CEO Enrique Lores said the company is taking “bold and decisive” action as it begins its next chapter.

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“We see significant opportunities to create shareholder value and we will accomplish this by advancing our leadership, disrupting industries and aggressively transforming the way we work,” Lores said on Thursday.

“We will become an even more customer-focused and digitally enabled company, that will lead with innovation and execute with purpose.”

The job reduction will be achieved through a combination of employee exits and voluntary early retirement, HP said in a statement. Currently HP employs around 55,000 people globally.

The company estimated it will incur total labor and non-labor costs of approximately $1 billion in connection with the restructuring and other charges, it told investors, with nearly $100 million in fiscal 4Q 2019, $500 million in fiscal 2020 and the rest split between fiscal 2021 and 2022.

HP said it expects to generate free cash flow of at least $3 billion for fiscal 2020. It plans to return at least 75% of free cash flow, with a 10% increase in the planned quarterly dividend amount, and the balance returned to shareholders through share repurchases.

Share repurchase plan

The technology company’s board recently authorized an additional $5 billion for future repurchases of its outstanding shares to offset dilution created by shares issued under employee stock plans and repurchase shares opportunistically.

For the current fiscal year, it expects adjusted earnings to be in the range of $2.18 to $2.22, the company said as it reported its third-quarter earnings.

Shares of HP fell 1% in premarket trading in New York on Friday morning to US$18.40.

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Story by ProactiveInvestors