This story was originally published on CFO Dive. To receive daily news and insights, subscribe to our free daily CFO Dive newsletter. Dive Brief: HP expects to reduce its global headcount by 4,000 to 6,000 employees by the end of fiscal year 2028, the technology company said Tuesday. The planned layoff is part of a company-wide initiative “to drive customer satisfaction, product innovation, and productivity through artificial intelligence adoption and enablement,” the Palo Alto, California-based supplie ...

Core Insights - HP plans to cut between 4,000 and 6,000 jobs globally by the end of October 2028, as it increasingly adopts AI to enhance product development, which has led to a lower-than-expected profit outlook for the coming year [1][2] - The job cuts are expected to result in annualized savings of $1 billion by 2028, although the restructuring will incur costs of approximately $650 million [2] Company Strategy - The CEO of HP, Enrique Lores, emphasized the significant opportunity to integrate AI into the company to accelerate product innovation, improve customer satisfaction, and enhance productivity [2] - Affected teams will include those involved in product development, internal operations, and customer support [2] Industry Context - The announcement of job cuts at HP aligns with a broader trend where companies are citing AI as a reason for workforce reductions, with other firms like Clifford Chance and PwC also adjusting their staffing in response to technological advancements [4][5] - A report from the National Foundation for Educational Research indicated that up to 3 million low-skilled jobs in the UK could be at risk due to automation and AI by 2035, particularly in trades, machine operations, and administrative roles [3] Financial Performance - HP reported better-than-expected revenues of $14.6 billion for its fourth quarter, with demand for AI-enabled PCs making up over 30% of its shipments during that period [8] - However, rising memory costs, which currently account for 15% to 18% of the cost of a typical PC, could impact profits for HP and its competitors [7][8]

Core Insights - HP reported $14.64 billion in revenue for the quarter ended October 2025, a year-over-year increase of 4.2% [1] - The EPS for the same period was $0.93, unchanged from a year ago, with a surprise of +2.2% compared to the consensus estimate of $0.91 [1] - The reported revenue fell short of the Zacks Consensus Estimate of $14.97 billion, resulting in a surprise of -2.23% [1] Financial Performance Metrics - HP's shares have returned -12.7% over the past month, underperforming the Zacks S&P 500 composite's -1.2% change [3] - The company currently holds a Zacks Rank 4 (Sell), indicating potential underperformance in the near term [3] Key Operational Metrics - Days in accounts payable: 139 days, slightly above the estimated 137 days [4] - Days of sales outstanding in accounts receivable: 35 days, exceeding the estimated 31.5 days [4] - Days of supply in inventory: 66 days, close to the estimated 67 days [4] Revenue Breakdown - Personal Systems - Commercial PS: $6.97 billion, below the estimated $7.34 billion, with a year-over-year change of +6.9% [4] - Personal Systems - Consumer PS: $3.38 billion, matching the estimated $3.38 billion, with a year-over-year change of +10.2% [4] - Total Personal Systems revenue: $10.35 billion, below the estimated $10.72 billion, with a year-over-year change of +7.9% [4] - Printing - Supplies: $2.76 billion, below the estimated $2.81 billion, with a year-over-year change of -3.6% [4] - Printing - Commercial Printing: $1.21 billion, slightly above the estimated $1.18 billion, with a year-over-year change of -4.2% [4] - Printing - Consumer Printing: $296 million, below the estimated $302.61 million, with a year-over-year change of -8.9% [4] - Total Printing revenue: $4.27 billion, slightly below the estimated $4.29 billion, with a year-over-year change of -4.2% [4] Earnings from Operations - Earnings from operations in Personal Systems: $597 million, below the estimated $632.41 million [4] - Earnings from operations in Corporate Investments: -$34 million, significantly better than the estimated -$156.27 million [4]

Financial Data and Key Metrics Changes - HP reported a 4% year-over-year revenue growth in Q4 2025, marking the sixth consecutive quarter of revenue growth, driven primarily by gains in personal systems [6][20] - Non-GAAP EPS was reported at $0.93, representing a sequential increase of 24% and coming above the midpoint of guidance [20] - For the full year, revenue grew by 3%, returning to growth after previous declines [11] Business Line Data and Key Metrics Changes - Personal systems revenue grew 8% year-over-year, with strong performance in both commercial and consumer segments [10][20] - Print revenue declined 4% year-over-year, reflecting market softness and delayed purchasing decisions [10][23] - Key growth areas in personal systems, including AI PCs, saw double-digit revenue growth, with AI PCs now representing over 30% of shipments [10][20] Market Data and Key Metrics Changes - EMEA revenue grew 6% and APJ was up 9% in constant currency, while Americas revenue was flat, indicating regional disparities in performance [19] - The Windows 11 refresh is expected to continue driving demand, with 40% of the installed base still on Windows 10 at the end of Q4 [10][46] Company Strategy and Development Direction - The company is focusing on four pillars for fiscal year 2026: personal systems growth, print market share expansion, workforce solutions recovery, and improved cost structure [15][16][17] - HP is committed to embedding AI into its operations to drive product innovation and improve customer satisfaction, with a target of achieving approximately $1 billion in gross run rate savings over three years [17][26] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by rising memory costs, which currently account for 15%-18% of the cost of a typical PC, and outlined strategies to mitigate these impacts [13][14] - The company remains confident in its ability to navigate the challenging trade environment and expects to see stronger revenue in the second half of fiscal year 2026 [25][49] Other Important Information - HP's cumulative gross annualized savings from its future-ready cost plan reached $2.2 billion, surpassing the original target [19] - The company announced a quarterly dividend increase to $0.30 per share, reflecting confidence in its long-term outlook [32] Q&A Session Summary Question: Free cash flow guidance for next year - Management expects free cash flow to be relatively flat year-over-year, offset by improvements in working capital and lower CapEx and restructuring costs [33][34] Question: Strategies to navigate memory pricing - The company plans to use its scale and supplier relationships to manage memory costs, including qualifying lower-cost suppliers and redesigning product configurations [35][36] Question: Pricing actions across the portfolio - Pricing increases will be considered on a case-by-case basis, with a focus on balancing profitability and customer demand [39] Question: Windows 11 refresh impact - The Windows 11 refresh is expected to continue as a tailwind, particularly in SMB and international markets [40][46] Question: Cost savings initiative rationale - The new cost savings initiative is driven by opportunities presented by AI, not solely in response to memory costs [42] Question: Customer reception to pricing actions - Pricing actions have been implemented in both consumer and commercial spaces, with varied impacts on market share [59][60]

Financial Highlights - Q4 FY25 - Net revenue reached $1464 billion, a 4% increase year-over-year in both nominal and constant currency[15] - Non-GAAP diluted net earnings per share were $093, aligning with the outlook of $087 to $097 per share[15] - Free cash flow amounted to $15 billion[15] - $08 billion was returned to shareholders through share repurchases and dividends[15] Financial Highlights - FY25 - Net revenue totaled $553 billion, a 3% increase from the previous year, or 4% in constant currency[16] - Non-GAAP diluted net earnings per share reached $312[16] - Free cash flow was $29 billion[16] - $19 billion was returned to shareholders through dividends and share repurchases[16] Segment Performance - Q4 FY25 - Personal Systems contributed 71% to net revenue, while Printing accounted for 29%[18] - Printing generated 57% of the total non-GAAP operating profit with an 189% operating profit margin, while Personal Systems contributed 43% with a 58% operating profit margin[19] - Printing revenue was $4266 billion, down 42% year-over-year, with an operating profit of $805 million[22] - Personal Systems revenue was $10353 billion, up 79% year-over-year, with an operating profit of $597 million[22] Segment Performance - FY25 - Personal Systems accounted for 70% of net revenue, while Printing represented 30%[20] - Printing generated 60% of the total non-GAAP operating profit with an 187% operating profit margin, while Personal Systems contributed 40% with a 53% operating profit margin[20] - Printing revenue was $16702 billion, down 37% year-over-year, with an operating profit of $3118 billion[23] - Personal Systems revenue was $38532 billion, up 65% year-over-year, with an operating profit of $2054 billion[23] Regional Performance - Q4 FY25 - Americas accounted for 42% of net revenue, EMEA for 34%, and APJ for 24%[19] - Americas net revenue decreased by 06% year-over-year (03% in constant currency), while EMEA and APJ increased by 79% year-over-year (56% and 89% in constant currency, respectively)[19] Regional Performance - FY25 - Americas accounted for 42% of net revenue, EMEA for 34%, and APJ for 24%[20] - Americas net revenue increased by 73% year-over-year (85% in constant currency), EMEA increased by 13% year-over-year (21% in constant currency), and APJ increased by 31% year-over-year (26% in constant currency)[20]

Core Insights - HP Inc. reported fiscal 2025 net revenue of $55.3 billion, an increase of 3.2% year-over-year, with a 3.7% increase in constant currency [4][8] - The company experienced a decline in GAAP diluted net EPS to $2.65, down 5.7% from the previous year, while non-GAAP diluted net EPS decreased to $3.12, down 9.0% [5][8] - HP generated $3.7 billion in net cash from operating activities and $2.9 billion in free cash flow for fiscal 2025, returning $1.9 billion to shareholders through dividends and share repurchases [10][8] Financial Performance - Fiscal 2025 GAAP net revenue was $55.3 billion, with a GAAP operating margin of 5.7%, down from 7.1% in the prior year [8][5] - Fourth quarter net revenue reached $14.6 billion, up 4.2% year-over-year, with a GAAP diluted net EPS of $0.84, down from $0.93 [6][7] - Non-GAAP operating margin for fiscal 2025 was 7.4%, a decrease from 8.5% in the previous year [8][5] Cash Flow and Shareholder Returns - HP's net cash provided by operating activities for fiscal 2025 was $3.7 billion, with free cash flow of $2.9 billion [10][8] - The company returned $1.9 billion to shareholders, including $1.1 billion in dividends and $850 million in share repurchases [10][8] - In the fourth quarter, HP generated $1.5 billion in free cash flow and returned $0.8 billion to shareholders [12][8] Strategic Initiatives - HP announced a company-wide initiative aimed at driving customer satisfaction and product innovation through AI, estimating gross run rate savings of approximately $1 billion by the end of fiscal 2028 [20][8] - The initiative will incur approximately $650 million in restructuring costs, with an expected reduction of 4,000-6,000 employees [20][8] - The company plans to increase its quarterly dividend to $0.30 per share, payable on January 2, 2026 [14][8] Outlook - For fiscal 2026, HP estimates GAAP diluted net EPS to be in the range of $2.47 to $2.77 and non-GAAP diluted net EPS to be in the range of $2.90 to $3.20 [18][16] - The company anticipates generating free cash flow between $2.8 billion and $3.0 billion for fiscal 2026 [18][16] - HP's outlook reflects added costs driven by current U.S. trade-related regulations [18][16]

Core Viewpoint - HP Inc. is facing challenges in meeting financial expectations, primarily due to its dependence on commodity prices and ongoing issues with quarterly performance [1][2]. Company Performance - HP Inc. has consistently missed quarterly earnings expectations, leading to skepticism about its ability to deliver future results [2]. - The company has engaged in share buybacks, repurchasing an average of 6% of its shares, but this strategy is viewed as insufficient to mask underlying performance issues [2]. Market Sentiment - Despite a recent stock price increase of nearly 6%, market sentiment remains cautious, with analysts suggesting that this does not provide a compelling reason to invest in HP [1]. - There is a belief that other sectors, particularly AI stocks, may offer better investment opportunities with higher upside potential and lower downside risk compared to HP [2].

Core Insights - HP Inc. has experienced significant stock declines, with a 15.2% drop year-to-date and a 24.3% decrease over the past 52 weeks, underperforming the S&P 500 Index which gained 16.3% in 2025 and 17.7% over the past year [1][2] Financial Performance - For fiscal 2025, analysts project a non-GAAP EPS of $3.11, indicating an 8% decline from the previous year. The company has missed profit expectations in three of the last four quarters and only met estimates in the most recent quarter [4] - The consensus rating for HP's stock is "Hold," with 15 analysts providing ratings that include one "Strong Buy," 13 "Holds," and one "Strong Sell" [4] Recent Developments - On October 13, HP shares rose by 5.9% following the announcement of a new manufacturing facility and AI R&D center in Saudi Arabia, aimed at enhancing production and regional supply chains [3] - HSBC upgraded HP's stock to "Buy" on October 14, raising the price target to $30, citing improved demand for PCs and printers, along with a projected 5.1% growth in PC shipments for fiscal 2025 [6] Market Comparison - HP has underperformed compared to the Technology Select Sector SPDR Fund, which saw gains of 29.3% in 2025 and a 31% increase over the past 52 weeks [2]

Group 1 - The analyst has over 10 years of experience researching more than 1000 companies across various sectors including commodities and technology [1] - The focus has shifted from writing a blog to creating a value investing-focused YouTube channel, covering hundreds of companies [1] - The analyst expresses a particular interest in metals and mining stocks, while also being comfortable with consumer discretionary, REITs, and utilities [1]

Core Viewpoint - Lenovo Group's stock price has risen to HKD 12.08, with a market capitalization of HKD 149 billion, driven by strong demand for AI solutions, indicating a potential upward trend in valuation as global hybrid AI development accelerates [1] Group 1: AI Market and Product Development - Lenovo's global PC market share reached a record high of 24.6% in Q2 CY25, with AI PC market penetration at approximately 30% and user engagement for AI applications at around 40%, suggesting a strong growth trajectory for AI-related products [1] - The company has launched personal and enterprise super intelligent systems, enhancing seamless collaboration across devices, which improves user efficiency and personalization [3] - Lenovo's AI infrastructure business saw a remarkable revenue increase of 155% year-on-year in FY2026 Q1, capitalizing on the rapid growth of global AI infrastructure demand [4] Group 2: Global Manufacturing and Strategic Investments - Lenovo's "China + N" global manufacturing strategy has proven advantageous in the current trade environment, with over 30 manufacturing bases worldwide, including 11 owned factories, allowing for resilient and agile operations [2] - The company has completed a USD 2 billion zero-interest convertible bond investment with Saudi Arabia's Public Investment Fund, establishing a production base in Saudi Arabia expected to commence operations in 2026, aligning with the country's Vision 2030 strategy [2] Group 3: Market Position and Financial Performance - HSBC maintains a bullish outlook on Lenovo's PC business, viewing it as a cash cow, with strong momentum in both consumer and commercial PC segments, particularly in gaming PCs in China [4] - Lenovo's management is optimistic about the commercial PC upgrade cycle, with approximately 250 million devices still running Windows 10, which is expected to drive future growth [5] - The company has mitigated tariff impacts by relocating PC production for the U.S. market to Vietnam, enhancing its flexibility in response to market dynamics [5]