Too early to know if Ireland on HP job cuts agenda

It is unclear if Ireland will be further affected by computer giant HP cutting thousands of jobs in a worldwide cost reduction programme.

Two years ago HP announced the closure of the bulk of its Irish operations, with 500 jobs cut when it shut its printing manufacturing facility in Leixlip.

At its height, HP employed 4,000 people in Ireland. Its main operations here now surround a facility in Liffey Valley, which carries out various non-manufacturing roles. It is unclear how many people the company still employs here.

HP will slash as much as 16% of its workforce as part of a broad restructuring meant to cut costs and boost sales growth amid the company’s first change in top leadership in four years.

The company said "the bulk of the savings" - or job cuts - will be in corporate functions and back-office support as opposed to manufacturing roles.

The personal computer giant said it will cut 7,000 to 9,000 positions through firings and voluntary early retirement.

A spokesperson said the company is not breaking down numbers by site or location. "These are the toughest choices any company ever makes, but they are critical to position HP for the future," they said.

The job reductions will help save about $1bn (€910,000) by the end of its 2022 financial year, the Palo Alto-based company said.

HP had 55,000 employees as of a year ago, the last time it disclosed the figure.

HP also announced it expects profit, excluding restructuring costs and other items, to be $2.22 to $2.32 a share in its 2020 financial year. Analysts, on average, estimate $2.23 a share.

The company released the projections as it faces a number of uncertainties. Dion Weisler, the chief executive who has shepherded the company since its 2015 split with Hewlett Packard Enterprise, is stepping down in November due to family health reasons.

The incoming CEO, Enrique Lores, is a longtime HP executive. The company’s printing business, a major source of profit, has seen falling sales and recently was dubbed a “melting ice cube” by analysts.

And an activist investor may be building a stake in the company, one analyst suggested this week.

"We see ourselves starting a new chapter for HP and we will be announcing bold moves to support that statement," Mr Lores said. "We have spent a lot of time building this plan. We can embrace the changes we see happening in the market and that can help us position the company for the future."

“We are really confident about the future of the company,” Mr Lores said.

HP’s reorganisation will cost $1bn, resulting in charges of $100m in its fourth quarter, $500m in 2020 and the rest split between 2021 and 2022, the company said.

HP’s board boosted the company’s share repurchasing plan by an additional $5bn. The company had $1.7bn remaining on its existing plan. HP said it will also boost its stock dividend by 10%. The company’s shares have declined 10% this year.

The company said it expects at least $3bn of free cash flow to be generated in 2020, and will return 75% or more of that money to investors.

Along with financial metrics, the company said it would make changes to its printing unit to focus on providing more services. HP will raise prices for printers that can be used with non-HP ink cartridges, so that the hardware is more profitable.

Currently, printers are sold cheaply and the unit’s operating profit margin is padded by the ink supplies.

HP will also start selling the underlying technology of its ink jet printing, known as microfluidics, to the healthcare and cosmetics industries, among others.

- Additional reporting Bloomberg