HP has announced a comprehensive workforce reduction initiative that will eliminate 4,000 to 6,000 jobs worldwide by October 2028, representing approximately 11% of its 56,000-employee base. Chief Executive Enrique Lores framed the decision as essential for embedding artificial intelligence capabilities throughout the organization to drive product innovation, enhance customer satisfaction, and boost productivity across operations.
The layoffs will concentrate in product development, internal operations, and customer support departments. While the restructuring carries an immediate cost of $650 million, HP anticipates realizing $1 billion in annual savings by 2028. This represents the second significant workforce reduction this year, following the elimination of up to 2,000 positions in February’s restructuring effort.
Financial performance demonstrates mixed results for the technology giant. HP exceeded revenue expectations with fourth-quarter sales totaling $14.6 billion, driven partly by strong demand for AI-capable personal computers. These advanced systems comprised more than 30% of HP’s shipments in the quarter ending October 31, reflecting successful market penetration in this growing segment.
Despite revenue success, HP’s earnings outlook disappointed market analysts. The company projects adjusted net earnings between $2.90 and $3.20 per share for the coming year, significantly below the consensus estimate of $3.33. Escalating memory chip prices, fueled by intense datacenter demand for AI infrastructure, have pushed memory costs to 15-18% of PC production expenses. Additional pressure comes from trade tariffs, further constraining profitability.
Market response proved sharply negative, with HP shares declining 6% following the announcement. The company’s transformation exemplifies widespread industry trends as businesses increasingly adopt artificial intelligence and automation technologies to streamline operations and reduce costs, despite the significant impact on employment.