HP Inc. (NYSE:HPQ) inches down 0.2% in early trading session on Friday as big tech is prepared for a difficult road ahead, with HP Inc. laying off 10% of its workforce, Dell warning that sales are falling, and Google preparing to label 10,000 employees as underperforming, a potential precursor to major layoffs.
The third-quarter results of rival Caterpillar Inc. were similar to Deere’s profit beat. Caterpillar also profited from product price hikes as a way to balance off increased manufacturing and raw material costs.
The Moline, Illinois-based business beat the average estimate of $7.11 per share by increasing net income to $2.25 billion, or $7.44 per share.
To $15.54 billion, total net sales and revenue increased 37%. Refinitiv said that equipment net sales increased to $14.35 billion, above projections of $13.39 billion.
In 850 different IT businesses, more than 137,000 white-collar individuals have already lost their jobs this year, and thousands more are anticipated to do so.
Rebalancing personnel was an early priority for several businesses following overhiring during the epidemic boom. Worry about an impending recession, which motivates attempts to increase operational efficiency, is the main cause. All of this occurs while it is anticipated that salaries would increase in 2019 to keep pace with inflation.
On Tuesday, HP revealed its fourth-quarter results, which included a plan to cut costs and an 11% decline in revenue for the quarter.
Dell, a competitor in the PC industry, last week reported a 6% decline in quarterly revenue combined with a 17% decline for a unit that includes computer sales.
On Monday’s earnings call, Dell CFO Tom Sweet said, “We expect ongoing global macroeconomic factors, including slowing economic growth, inflation, rising interest rates, and currency pressure, to weigh on our customers.”
In the midst of a persistent slowdown in the demand for PCs and printers, HP Inc. (HPQ) is trying to get leaner, which analysts believe could unleash a significant amount of future earning power.
To put this in perspective, that will contribute $0.50 to EPS in fiscal year 2023 and over $1 to EPS at the end of fiscal year 2025. According to Citi analyst Jim Suva, this is a significant positive that investors did not anticipate.
According to HP CEO Enrique Lores on Yahoo Finance Live (see video above), the cost reductions take place in a “difficult market environment.”
Sales for HP’s fiscal fourth quarter decreased by 11.2% from the prior year due to a 26% decrease in the sales of notebook computers. In the meantime, commercial printer unit sales increased 5% while consumer printer unit sales declined 4% in the quarter.