Inkjet Wholesale News aims to provide updates on the latest significant occurrences in the field of printing. Whether it’s the launch of a new technology or volatility of market prices, we’ll be here to give you the lowdown on what happened, when it happened, and what it means!
HP Layoffs to Touch 85,000 over Market Uncertainties
Earlier, in March, we explained how HP plans to split its business into two separate identities of HP Inc. and Hewlett Packard Enterprise. It seems that the fallout of this split is going to result in a number of HP employees losing their jobs. The news about the HP layoffs was revealed by HP’s CEO Meg Whitman, who will also be leading one of the two spinoff companies.
Whitman explained in a recent public interview that the printing industry giant can be expected to lay off anything between 25,000 and 30,000 employees. This news of HP layoffs comes on the back of development in the last few years which resulted in about 55,000 people losing their HP jobs. The latest reveal means that the impending split will cause up to 85,000 HP employees being laid off!
It is notable that the Whitman was the person who announced this latest round of HP layoffs. Whitman’s announcement means that the vast majority of lost jobs will revolve around the new entity of HP Enterprise because Whitman is expected to be the CEO of this new company which will be taking over HP’s enterprise divisions.
While announcing the latest round of HP layoffs, Whitman also explained the underlying reasons behind the move that is expected to be very unpopular amongst the company’s employees. According to Whitman, the HP layoffs have become necessary. She says that the HP layoffs are unavoidable because of the changing nature of the industry.
Supposedly, the technology industry is changing too rapidly for such measures to not be taken. The idea behind the HP layoffs is that the new company will be focusing more on restructuring its labour force to new locations where costs are lower. Furthermore, the new company is also going to be focusing on a higher level of automation in its operations.
These impending HP layoffs will mean that the technology giant will be paring its total workforce by a massive 10 percent. Currently, HP has a workforce of about 300,000 people. The 55,000 HP layoffs mentioned earlier have occurred in a period of the last four years. The downsizing done in the past was done to allow the company to keep pace with its dropping revenue numbers. The latest downsizing will be done to ensure that the company starts making some profits.
The layoff of up to 30,000 people will be no mean thing. In fact, as per the company’s estimates, the latest downsizing move will help the company save an amazing $2.7 billion every year! However, that number will not affect the company’s balance sheet immediately. The reason for this is that the company said that it will take about $2.7 billion to carry out the whole downsizing operation. The effects of the HP layoffs will only begin to show by the fourth quarter of the current financial year.
With regard to these HP layoffs pushing HP’s profit margins higher, it’s important to note that such predictions were made by Whitman earlier as well. The earlier prediction was that the split combined with the four year HP layoffs will help the technology giant into profits before the split even took place. However, with the split now only a few days away, the projections have been revised. Whitman now says that the profits will start accruing by the next year.
When Whitman was asked why the profit estimates had to be revised, she replied that the speed with which HP’s relevant markets were changing was making it difficult to make accurate forecasts. She qualified that the company has “a good handle on it (forecasts) now”.
The future of the two HP spinoff companies may be up in the air despite the planned HP layoffs of about 30,000 people. Analysts and industry watchers are predicting that any one of the two HP spinoffs may have to face down hostile or benign takeovers from other industry giants after the split. The focus from most experts was on HP Enterprise, which they felt may be the more susceptible of the two about to be formed companies.
Lexmark Printer Business Stagnation to Continue Into H2, 2015
It seems that the financial cloud that the printing industry is under will continue to dog the heels of most Original Equipment Manufacturers (OEMs). The companies’ revenues are suffering because of a wide variety of market related trends which range from currency fluctuations to consumers’ switch from genuine consumables to compatible consumables.
Forbes had, earlier, done an analysis of Lexmark’s prospects with regard to its equity in the future. We had written about this analysis in a separate post as well. While there were many riders and conditions on its projections, the crux was that if Lexmark can improve its revenue numbers and boost the on-going trends, then it may be well placed in the future.
However, now Forbes has done another analysis and revealed that the stagnation in Lexmark’s printer business can be expected to continue in the second half of the current fiscal despite the fact that the company’s Managed Printer Services (MPS) has grown considerably.
The current stagnation in Lexmark’s printer business is suffering from the general downtrend in the whole printer hardware industry, according to Forbes. In addition to this general downtrend, Forbes says that the company’s revenues from printer hardware and supplies have suffered due to other reasons. These reasons include strong pricing focused competition from other OEMs and the cheaper consumables being offered by aftermarket manufacturers.
Forbes says that the stagnation of Lexmark’s printer business will continue simply because these market trends will continue well into the second half of the current fiscal. In fact, as per Forbes, Lexmark will continue to report lower revenues from these avenues. This decline is very significant because 83 percent of Lexmark’s overall value is drawn from its printer hardware and supplies business.
The MPS business of Lexmark accounts for 22 percent of its overall printer business. The MPS business of Lexmark has seen an uptick financially but Forbes suggests that the improvement will not be able to offset the downtrend in other areas of the business’s concerns.
Overall, Lexmark has been focusing on improving its end to end solutions business which means that its focus has been on business process management and electronic content management.