HP has announced that it will be letting go approximately 7,000 to 9,000 employees as part of a company restructure that will begin in fiscal year 2020.
The company said the restructuring plans will see its operating model be simplified so it can become a “more digitally enabled company”.
“We are taking bold and decisive actions as we embark on our next chapter,” said Enrique Lores, HP incoming president and CEO.
“We see significant opportunities to create shareholder value and we will accomplish this by advancing our leadership, disrupting industries, and aggressively transforming the way we work. We will become an even more customer-focused and digitally enabled company that will lead with innovation and execute with purpose.”
Affected employees will be let go through a combination of employee exits and voluntary early retirement, HP said.
To be completed by fiscal 2022, the restructure, according to HP, will cost the business a total of approximately $1 billion, with approximately $100 million in 4Q19, $500 million in fiscal 2020, and the rest to be split between fiscal 2021 and 2022.
The company also estimates that the restructure will result in annualised gross run rate savings of about $1 billion by the end of fiscal 2022.
The announcement comes as part of HP’s outlook for fiscal 2020, which estimates that its generally accepted accounting principles (GAAP) diluted net Earnings Per Share (EPS) will be in the range of $1.98 to $2.10. It also estimates that non-GAAP diluted net EPS will be in the range of $2.22 to $2.32.
Based on the current environment, HP said it anticipates generating free cash flow of at least $3 billion for fiscal 2020.