HP Issues Mediocre Outlook, To Cut At Least 3,000 Jobs

(RTTNews) - HP Inc. (HPQ), the maker of printers and personal computers, Thursday issued an outlook for the full year in line with Wall Street expectations.

HP reportedly plans to lay off 3,000 to 4,000 employees over the next three years in order to curb operating expenses. The layoffs will save $200 million to $300 million per year beginning in fiscal 2020. The company will incur charges of $350 million to $500 million.

HP has been struggling with weak demand for PCs and printers as more people now prefer smartphones and use cloud for storage purposes.

For the fiscal year 2017, the company estimates earnings from continuing operations of $1.47 to $1.57 per share and adjusted earnings of $1.55 to $1.65 per share. Analysts polled by Thomson Reuters currently estimate earnings of $1.60 per share.

HP anticipates generating cash flow from operations of about $2.8 to $3.1 billion in 2017. With about $0.5 billion in net capital expenditures, free cash flow outlook is in the range of $2.3 to $2.6 billion.

HP expects to return 50%-75% of annual free cash flow to shareholders through a dividend and buy backs. The company expects increase its quarterly dividend by 7% and boost its share repurchase program by $3 billion.

"We are increasing our quarterly dividend as a demonstration of our confidence in our execution and the sustainability of our cash flow," said Cathie Lesjak, Chief Financial Officer, HP. "HP continues to be a compelling investment opportunity. The combination of our recurring revenue streams, negative cash conversion cycle, and efficient operating model drives strong operating margins and cash flow."

HPQ closed Thursday's trading at $15.15, down $0.20 or 1.30%, on the NYSE. The stock further dropped $0.27 or 1.78% in the after-hours trading.