The company reported net revenues of $14.8 billion in the fourth quarter, marking a decline from $16.7 billion in the same period last year. The effort to reduce payrolls, which will conclude by the end of fiscal year 2025, will save approximately $1 billion.
“Looking forward, the new Future Ready strategy we introduced this quarter will enable us to better serve our customers and drive long-term value creation by reducing our costs and reinvesting in key growth initiatives to position our business for the future,” HP CEO Enrique Lores said in the earnings report.
HP, not to be confused with Hewlett Packard Enterprise, a business-to-business spinoff created in 2015, currently employs approximately 51,000 people. The company announced efforts to eliminate 7,000 and 9,000 employees three years ago.
The personal computer maker is one of several technology firms to announce widespread dismissals. Companies such as Amazon, Microsoft, and Tesla have announced hiring pauses or layoffs for their corporate offices over the past several months, citing recessionary risk and broader economic uncertainty. Leaders in sectors such as media and entertainment are referencing similar issues amid efforts to reduce headcount.
Despite a rise in economic output during the third quarter, the United States previously met the rule-of-thumb definition of a recession, two consecutive quarters of negative growth, as output contracted at a 1.6% annualized rate in the first quarter and a 0.6% pace in the second quarter. In order to manage persistently high inflation, policymakers at the Federal Reserve have increased target federal funds rates by multiple 0.75% increments in the second half of this year. Federal Reserve Governor Christopher Waller cautioned that the moves would produce higher unemployment rates.
Some investors have criticized technology companies for bloating their payrolls in recent years. Altimeter Capital Management CEO Brad Gerstner said in a letter to Meta CEO Mark Zuckerberg that the company, which more than tripled headcount over the past four years, should dismiss workers to reduce costs in a more difficult macroeconomic landscape.
“It is a poorly kept secret in Silicon Valley that companies ranging from Google to Meta to Twitter to Uber could achieve similar levels of revenue with far fewer people,” the investor wrote. “I would take it a step further and argue that these incredible companies would run even better and more efficiently without the layers and lethargy that comes with this extreme rate of employee expansion.”
Twitter CEO Elon Musk, who acquired the social media platform last month, immediately moved to dismiss half of the company’s employees. In an email to remaining staff members, he said they must be prepared to work “long hours at high intensity” to keep their positions. “Twitter will also be much more engineering-driven,” Musk continued. “Design and product management will still be very important and report to me, but those writing great code will constitute the majority of our team and have the greatest sway. At its heart, Twitter is a software and servers company, so I think this makes sense.”