HP Inc., one of Boise’s most venerable technology companies, expects to cut 7,000 to 9,000 employees by the end of 2022, but it isn’t clear how many cuts will come from Idaho.
“We do not break the restructuring out by site or location,” said an HP spokesperson, who asked not to be named, in an email message.
Eligible employees in the U.S. can retire early with enhanced benefits, the spokesperson said.
Altogether, restructuring is expected to cost $1 billion and result in annualized gross run rate savings of $1 billion, the company said in a press release. Of the expenses, approximately $100 million will occur in fiscal Q4 of 2019, $500 million in fiscal 2020 and the rest split between fiscal 2021 and 2022, the company said.
The announcement was made during a Securities Analyst Meeting at the company’s Palo Alto headquarters.
HP has had more than 3,000 employees on its Boise campus, but is now down to roughly 1,700, according to a speech last week by Chief Diversity Officer Lesley Slaton Brown, as reported by the Idaho Press.
HP sold its 197-acre Boise campus to the state in 2017, leasing back 793,000 square feet of the total 1.346 million square feet across eight buildings. A 152,000-square-foot building had been vacant for at least five years.
“HP has been at the epicenter of innovation for Idaho and has transformed our tech ecosystem,” said Jay Larsen, president and CEO of the Boise-based Idaho Technology Council.
Layoffs aren’t necessarily bad news, said Rick Ritter, lab director for New Ventures Lab.
“Some of those laid off will start something new or buy something they like doing. More, depending on their age, will either look for a position elsewhere or simply retire,” Ritter said in an email message. “Economically, it means high-wage jobs will decline a bit, a business or two will have new owners and we will get a small number of new companies.”
Print supplies pressure
Several analysts downgraded HP stock recently due to concerns about printer supplies, on which the company depends.
“With supplies growth expected to be negative in both 2019 and 2020, and supplies now having declined at a 4% [compound annual growth rate] since 2011, we worry that printing may be facing greater structural headwinds from the shift to digital (i.e., people printing less) and increased pressure from cloned/remanufactured supplies,” wrote Toni Sacconaghi, a Sanford C. Bernstein analyst, in September.
He categorized HP as a “melting ice cube,” a term of art for an investment vehicle with a value that is expected to decline over time.
John Roy, an analyst with UBS, downgraded HP stock a week later, saying he expected “print supplies to remain under pressure due to secular trends, lack of consolidation, and competition from third party suppliers.”
In an email message, he said he didn’t have any information about the effect on Boise.
For the most recent quarter, ending on July 31, HP reported revenue of $14.6 billion, in line with estimates, with non-GAAP profit of 58 cents per share, ahead of the company’s previous guidance of 53 to 56 cents. But it also reported a 5.3% revenue drop in printing, including a 10% drop in consumer hardware, a 3% increase in commercial hardware and a 7% decline in supplies.
Speaking at the meeting, HP executives acknowledged that customers buying third-party printing supplies rather than HP’s, particularly in Europe, was hurting the company. The company plans to change its sales model, which currently depends on cheap hardware.
Instead, HP will offer two sales models, said Enrique Lores, currently president of imaging printing and solutions, who takes over as CEO Nov. 1. Customers will be able to choose between paying a higher price for hardware, which can be used with third-party ink suppliers, or subsidized hardware that works only with HP printing supplies, he said.