HP slides on weak 2026 outlook and layoffs despite topping quarterly estimates
HP slumped more than 5% in premarket trading after the computer and printer giant announced weaker-than-expected guidance for fiscal 2026 alongside plans for a roughly 10% cut to its workforce. The company reported having 58,000 employees as of October 2024, per its latest annual filing.
For the fiscal fourth quarter ended October 31, sales rose 4% year over year to $14.64 billion, topping the $14.48 billion expected. Adjusted earnings per share came in at $0.93, just about 1% ahead of the LSEG consensus.
What spooked investors was HP’s soft FY2026 EPS forecast of $2.90 to $3.20, well below Wall Street’s $3.33 estimate at the midpoint. The company said its outlook reflects “the added cost driven by the current U.S. trade-related regulations in place, and associated mitigations.”
Behind the muted outlook is a sharp rise in memory chip prices — now 15% to 18% of a typical PC’s cost — which may offset some of the lift HP’s PC business is getting from Windows 11 upgrades, while the printer segment remains a drag, with revenue down 4% as customers delay purchases.
The company also announced plans to reduce global headcount by around 4,000 to 6,000 employees as part of a restructuring tied to a new AI push — with CEO Enrique Lores saying in an interview with Yahoo Finance that AI will eventually do many tasks “better” and “faster.” HP expects the plan to generate $1 billion in annualized savings by FY2028. The move mirrors its 2022 restructuring, which also targeted up to 6,000 job cuts and ultimately delivered $2.2 billion in gross savings, per the company.
With this morning’s slide, HP shares are down nearly 30% for the year.
What spooked investors was HP’s soft FY2026 EPS forecast of $2.90 to $3.20, well below Wall Street’s $3.33 estimate at the midpoint. The company said its outlook reflects “the added cost driven by the current U.S. trade-related regulations in place, and associated mitigations.”
Behind the muted outlook is a sharp rise in memory chip prices — now 15% to 18% of a typical PC’s cost — which may offset some of the lift HP’s PC business is getting from Windows 11 upgrades, while the printer segment remains a drag, with revenue down 4% as customers delay purchases.
The company also announced plans to reduce global headcount by around 4,000 to 6,000 employees as part of a restructuring tied to a new AI push — with CEO Enrique Lores saying in an interview with Yahoo Finance that AI will eventually do many tasks “better” and “faster.” HP expects the plan to generate $1 billion in annualized savings by FY2028. The move mirrors its 2022 restructuring, which also targeted up to 6,000 job cuts and ultimately delivered $2.2 billion in gross savings, per the company.
With this morning’s slide, HP shares are down nearly 30% for the year.
