Computer and printer manufacturer HP has set in motion a workforce reduction initiative that will eliminate between 4,000 and 6,000 positions worldwide by October 2028. The cuts affect approximately 11% of the company’s 56,000-employee organization, with CEO Enrique Lores characterizing AI integration as essential for driving innovation and efficiency.
Product development teams, internal operations staff, and customer support departments will experience the most significant impact from the planned workforce reductions. HP expects to incur $650 million in restructuring costs while positioning the company to achieve $1 billion in annual savings by 2028. These reductions follow earlier layoffs of 1,000 to 2,000 employees in February, indicating ongoing organizational transformation.
HP’s financial performance shows impressive revenue generation, with fourth-quarter sales reaching $14.6 billion and surpassing market expectations. The company has successfully captured market share in AI-enabled computers, which accounted for more than 30% of shipments during the quarter ending October 31. Demand for AI-integrated computing solutions continues accelerating across markets.
However, profitability projections disappointed market analysts. HP forecasts adjusted earnings per share between $2.90 and $3.20 for the upcoming year, significantly below the consensus estimate of $3.33. Escalating memory chip costs driven by datacenter demand for AI infrastructure have substantially increased production expenses, with memory now representing 15-18% of typical PC costs. Trade tariffs add additional pressure on profit margins.
Market response proved negative, with HP shares declining 6% after the announcement. The company’s strategy mirrors broader industry trends as organizations increasingly adopt artificial intelligence and automation technologies to optimize operations and reduce costs, despite the significant human impact of workforce displacement.