On Thursday (3 Oct), American technology giant, HP announced that it will cut up to 16% of its workforce as part of a restructuring plan aimed at cutting costs.
In its statement, HP said it will be cutting about 7,000 to 9,000 jobs through a combination of retrenchment and voluntary early retirement.
The company estimates that the plan will result in annual gross run rate savings of about US$1 billion by the end of fiscal 2022. At the same time, it also announces a dividend increase of 10%.
HP said that it expects to return at least 75% of free cash flow, with a 10% increase in the planned quarterly dividend amount, and the balance returned to shareholders through share repurchases in the fiscal year 2020.
“We are taking bold and decisive actions as we embark on our next chapter,” said Enrique Lores, incoming President and CEO of HP. “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.”
Enrique Lores would be replacing Dion Weisler as the new President and CEO.
Based on the current environment, HP anticipates generating free cash flow of at least $3 billion for fiscal year 2020.
The company also estimates that it will incur total labor and non-labor costs of approximately US$1.0 billion in connection with the restructuring and other charges. The restructuring is expected to be completed in fiscal year 2022.
To boost its share price, HP’s Board of Directors has authorized an additional US$5 billion for future repurchases of its outstanding shares of common stock.
Currently, HP has about 55,000 employees worldwide, according to the latest filing with the US Securities and Exchange Commission.
Prof Koh: We don’t want displaced workers to become Grab drivers or angry voters
In response to questions from the local media, a spokesperson from HP’s Singapore office said that the job cuts were necessary for the company’s future.
“To create the necessary capacity to reinvest in our business requires us to make some difficult decisions that impact a significant number of our colleagues,” the spokesperson told the media.
However, the person declined to answer when asked if there would be job cuts in HP Singapore.
Nevertheless, another media has reported that HP staff in Singapore are “worried” after HP announced plan to cut 7,000 to 9,000 workers globally. ST had estimated that there may be as many as 10,000 employees in Singapore, or about one fifth of HP’s global workforce.
Meanwhile, at the Singapore Bicentennial Conference on Tue (1 Oct), the former Singapore’s UN Permanent Representative Professor Tommy Koh advised the 4th generation PAP leaders to look into allegations of discriminatory hiring practices and working to make Singapore a classless society.
He hopes the 4G leaders will help establish a more caring and inclusive society in Singapore, with employers and the Government stepping in to help those who are laid off as the economy restructures.
“We should not abandon the displaced workers because we don’t want more and more Singaporeans to become Grab drivers or, worse, to join the ranks of the angry voters,” he said.
“Remember this: It was the angry voters who helped to elect President (Donald) Trump in the United States. It was the angry voters in the United Kingdom who voted to leave the European Union,” Prof Koh warned.
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