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What Were Hewlett-Packard’s Primary Objectives in Fiscal 2Q16?

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HPQ’s objectives: Reduced cost structure

Hewlett-Packard (HPQ) has stated that it expects the markets to be tough for “at least several quarters.” Because of this, the company needs to focus on reducing its costs and improving its profit margins to offset the fall in sales.

HPQ believes that it’s on track to reduce its cost structure by more than $1 billion in fiscal 2016 through productivity initiatives and an acceleration of its three-year restructuring plan.

According to HPQ’s CEO Dion Weisler, “We executed a number of cost sections including a reduction of approximately 1,200 headcount year-to-date and are on track to achieve our savings objective by year end. I continue to believe we have even more opportunities.”

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Global Equities Research estimates that there will be approximately 335,000 layoffs in the technology industry in 2016. As shown in the above chart, EMC is expected to lay off around 12,000 employees. Hewlett-Packard Enterprise (HPE), HPQ, IBM (IBM), and Cisco (CSCO) are estimated to lay off 72,000, 86,000, 95,000, and 14,000 employees, respectively.

Strategic shift toward growth areas

In fiscal 2Q16, Hewlett-Packard achieved another quarter of sequential improvement in its print hardware. The company also continued to shift its portfolio toward strategic and future growth areas.

In fiscal 2Q16, HPQ saw constant currency growth in its commercial notebooks, commercial mobility, commercial services, managed print services, and graphics printing solutions. HPQ also launched its first 3D systems, which we’ll discuss later in this series.

HPQ’s peer IBM makes up 3.2% of the Technology Select Sector SPDR ETF (XLK).

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