Yahoo Finance

HP layoffs could set the stage for a big profit boost: Citi analyst

Brian Sozzi · Anchor, Editor-at-Large
Wed, November 23, 2022 at 4:10 PM

HP Inc. (HPQ) is looking to get leaner amid an ongoing slowdown in demand for PCs and printers, and that could unleash a lot of future earnings power, analysts contend. ... Late Tuesday, the tech giant revealed a new $1.4 billion cost-cutting plan that will see it shed 4,000 to 6,000 employees by fiscal year 2025. That's about 12% of HP's workforce.

"To put this in context, that is $0.50 of EPS help in fiscal year 2023 and over $1 of EPS exiting fiscal year 2025 and we believe that is a big positive that investors did not expect," Citi analyst Jim Suva wrote in a note to clients on Wednesday.

HP CEO Enrique Lores told Yahoo Finance Live (video above) that the cost cuts come against the backdrop of a "tough market environment." ... HP saw fiscal fourth-quarter sales fall 11.2% from a year ago, pushed lower by a 26% decline in the number of notebook computer units sold. Meanwhile, desktop unit sales fell 3% in the quarter and consumer printer unit sales fell 4% while commercial gained 5%.

Despite the sales drops, the company beat analyst forecasts across the board.

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