Oct 14, 2016 | By Nick
HP Inc has announced it will cut up to 4000 staff over the coming three years as it restructures the company.
The computing giant shook up the 3D printing world in May with the introduction of the HP Jet Fusion 3D Printing Solution that promised to provide a viable manufacturing system that was fast enough to consign the traditional production line to history.
The commercial 3D printer has lived up to that early promise and is certainly a potent arm of the company going forward, but it couldn’t compensate for a poor year in HP’s core consumer PC and desktop printer business. The public are increasingly reliant on smartphones and that has to have an impact on the sale of laptop computers and the peripherals that go with them.
So despite producing the world’s thinnest laptop in the Spectre 13 and the award-winning X3 Lap Dock, the computing giant has had to absorb losses and make redundancies. HP has to bear the brunt of a global trend and the PC market is down 3.9% year-on-year according to market research firm IDC, while Gartner claims it’s down by 5.7%. These are lean times in the home computing market, then, and that side of the business dwarf’s HP’s investment in 3D scanning and 3D printing.
It is still spending big and expanding in the 3d printing and scanning space as it shifts its focus to our growth industry. In July it bought David Vision Systems and David 3D Solutions and stated its intent to build a complete 3D ecosystem, from 3D scanning through computing to the 3D printing. It also committed to investing more than $65 million a year into 3D printing R&D center in Spain. So it’s fair to say that HP saw these problems coming and is working on the solution. In the short-term, though, it has to restructure and put a large amount of people out of work.
These heavy cuts will save the company $200-300 million a year from 2020, but there’s no hiding the fact that this is a major blow. HP has approximately 50,000 employees around the world so it is actually shedding almost 10% of its total workforce.
Dion Weisler, President and CEO of HP Inc
“Although our markets remain very challenged, we are committed to innovating in the core and continue to see long-term growth opportunities in commercial mobility and services, the disruption of the A3 copier market and the digitization of graphics and manufacturing through our leading 3D printing solutions,” said CEO Dion Weisler.
Hewlett-Packard Co. split a year ago in Silicon Valley’s biggest ever corporate break-up and HP Inc rose from the ashes as the new hardware division. It has saved more than $1 billion thanks to the split, according to Weisler. Now the company is on the hunt for investors and reduced costs, together with an aggressive payout strategy, will make the tech giant a safer bet for the money men.
HP Inc claims it will return 50-75% of the annual free cashflow to the shareholders, which sounds exceptionally aggressive. But if that’s what it takes to raise the finance it needs to build on its exceptional progress in the 3D printing and 3D scanning world, and shore up its defenses in the home computing market, then that’s what the Palo Alto company has to do.
The company stock dropped by 1.3% when it broke the news. Considering the magnitude of the job losses, this is actually a positive sign and until this bombshell the shares had risen 28% this year.
HP Inc is in relatively good shape and it has a formidable weapon in the HP Jet Fusion 3D Printing Solution, especially if it can integrate the David products and create a complete manufacturing system that is an order of magnitude cheaper than a full production line. Desktop inkjet printing simply won’t get back to its glory days, technology has moved on. So HP Inc was wise to make the move and now it has to go through the painful transition to a high-tech company with the right number of people on board.
It won’t go down well with the unions, it has raised eyebrows on Wall St and HP Inc will have to work hard to find the investment it needs in the wake of this news. But if it can slim down and come back twice as strong, this day will soon be forgotten, by the investors at least.
Posted in 3D Printer Company
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