Shouldn’t HP be the most terrible of such a hard-working and hard-working HP?
Editor’s note: This article is from WeChat public account “Stone Business Review” (ID :libusiness), author Gao Dongmei, editor Jin Mei.
HP has again… layoffs.
On October 4th, Hewlett-Packard announced plans to lay off 7,000 to 9,000 people worldwide in the next three years in the form of direct dismissal and early retirement. This is the first time in four years that the company has undergone a large-scale replacement of its top leadership. Part of the restructuring to cut costs and boost sales growth.
Based on the current 55,000 employees worldwide, HP’s layoffs are 16%. It is expected to help the company save $1 billion a year before the implementation of the plan in 2022, but the company will assume the contract from the fourth quarter. $1 billion in restructuring costs. In addition, the company’s board of directors also approved another $5 billion stock repurchase program on September 30.
HP executives said layoffs will give them more money to re-use for growth and shareholder returns. The company is expected to generate at least $3 billion in free cash flow by 2020, and at least a 75% return to shareholders by increasing 10% quarterly dividends and stock repurchases.
However, Wall Street is cautious about HP’s restructuring plan, and Citi expects HP’s share price to be “turbulent.” Wells Fargo believes that some of these changes are “essentially inevitable,” and LoopCapitalMarkets was surprised by the extent of the program and lowered its expectations for holding the stock.
Sure enough, on the day of the announcement of the layoff plan, HP once plunged more than 10.54%, and finally fell 9.57%. The market value evaporated by 2.6 billion US dollars a day, about RMB 18.8 billion. The stock price has not only hit a new low in two and a half years, but also The high point in October 2018 has fallen more than 36%.
As the first IT giant in Silicon Valley to create a garage culture, HP has been laying off staff and making business adjustments in recent years. When many media saw layoffs, they shouted “What happened to HP? How long can it survive by layoffs?”
HP, is it really not working?
01Main industry landslide provoked staff
In recent quarters, HP has been under pressure from the decline in the printing consumables business, which was HP’s largest source of revenue. Under the leadership of CEO Dion Weisler, Hewlett-Packard has set a new plan for future development and incorporated 3D printing into the business development landscape, but Wesler announced his resignation in August this year for family reasons.
just in itOn the day of resignation, HP’s third-quarter results report showed that net revenues increased only 0.1% year-on-year, and print group revenues including printers, printing supplies and other related products decreased by 5% year-on-year.
There is an analysis that HP’s printing consumables business has been limited by two factors. First, the number of users using printers is decreasing, which makes the market demand for ink cartridges less and less. Secondly, it focuses on Some companies in Europe, the Middle East and Asia are also constantly manufacturing cartridges that can be used on HP printers.
Changes in user habits and concerns about environmental issues have hurt HP’s business, and HP plans to offer new ways to sell its products. HP printers are currently selling very cheaply, and the division’s operating margins are filled by ink products. In the future, HP will adjust the printing business’s operational strategy to provide lower-priced printers, but will adopt new technologies to ensure they are only compatible with HP inks.
While the printer division will be tuned to focus on providing more services, the company will increase the price of printers that can use non-HP ink cartridges to increase hardware profits and sell them to industries such as healthcare and cosmetics. Ink printing technology, the so-called microfluidic technology.
At present, the printing business accounts for about one-third of HP’s revenue. As a giant company with annual revenue of 58.5 billion US dollars, HP suddenly changed its business model strategy and raised prices, which will have a certain impact on HP’s market share.
Bernstein analyst Tony Sacconaghi lowered HP’s stock rating from “outperform” to “flat with the broader market” and said “because supply is expected to be negative growth in both 2019 and 2020, And the compound annual growth rate since 2011 has fallen by 4%, and we are concerned that HP’s printer business may face greater structural risks – users are turning to digital.”
At the same time, although HP’s personal computer business grew by 3% year-on-year, but because the windows10 switch cycle is coming to an end, coupled with macroeconomic issues, the outside world is not optimistic about HP’s next situation. On November 1, Lorez will replace Dion Weissler to officially take over HP.
Can this new CEO change the status quo of HP and reinvigorate the company?
02First-class teaching place
When we mentioned the birthplace of the IT industry, we had to mention Silicon Valley. In San Francisco, from Santa Clara to San Jose, a narrow strip of nearly 50 kilometers is the world’s most famous electronics worker.