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What is 'Forecasting' 
Forecasting is the use of historic data to determine the direction of future trends. 
Businesses utilize forecasting to determine how to allocate their ​budgets​ or plan 
for anticipated expenses for an upcoming period of time. This is typically based 
on the projected demand for the goods and services they offer. 

BREAKING DOWN 'Forecasting' 

Investors utilize forecasting to determine if events affecting a company, such as 
sales expectations, will increase or decrease the price of shares in that 
company. Forecasting also provides an important ​benchmark​ for firms, which 
need a long-term perspective of operations. Stock ​analysts​ use forecasting to 
extrapolate how trends, such as GDP or unemployment, will change in the 
coming quarter or year. The further out the forecast, the higher the chance that 
the estimate will be inaccurate. Finally, statisticians utilize forecasting in any 
situation that requires the use of forecasting. For instance, data may be 
collected regarding the impact of customer satisfaction by changing business 
hours or the productivity of employees upon changing certain work conditions. 
Forecasting Techniques 
Stock analysts use various forecasting methods to determine how a stock's 
price will move in the future. They might look at revenue and compare it 
to ​economic indicators​. Changes to financial or statistical data are observed to 
determine the relationship between multiple variables. These relationships may 
be based on the passage of time or the occurrence of specific events. For 
example, a sales forecast may be based upon a specific period (the passage of 
the next 12 months) or the occurrence of an event (the purchase of a 
competitor’s business). 

Stages of Forecasting 
Forecasting addresses a problem or set of data. ​Economists​ make assumptions 
regarding the situation being analyzed must be established before the variables 
of the forecasting are determined. Based on the items determined, an 
appropriate data set is selected and used in the manipulation of information. The 
data is analyzed, and the forecast is determined. Finally, a verification period 
occurs where the forecast is compared to the actual results in order to establish 
a more accurate model for forecasting in the future. 

Forecasting Models

Qualitative forecasting models are useful in developing forecasts with a limited 

scope. These models are highly reliant on expert opinions and are most 
beneficial in the short term. Examples of qualitative forecasting models include 
market research, polls and surveys that apply the Delphi method. Quantitative 
methods of forecasting exclude expert opinions and utilize statistical data based 
on quantitative information. Quantitative forecasting models include time series 
methods, discounting, analysis of leading or lagging indicators and econometric 

Predictive Analytics 
The use of statistics and modeling to determine future performance based on 
current and historical data. Predictive analytics look at patterns in data to 
determine if those patterns are likely to emerge again, which allows businesses 
and investors to adjust where they use their resources in order to take 
advantage of possible future events. 

HP Issues Cautious Forecast, Plans

Job Cuts
Expects to cut 3,000 to 4,000 employees from payroll over the next
three years

​ ayroll​ is a company's list of its employees, but the term is commonly used to refer to:
the total amount of money that a company pays to its employees. a company's records of its
employees' salaries and wages, bonuses, and withheld taxes. the company's department that
calculates and pays these.

Outside HP Inc.’s headquarters in Palo Alto, Calif., in May. ​PHOTO: DAVID PAUL MORRIS/BLOOMBERG

Updated Oct. 13, 2016 5:30 p.m. ET

HP​ Inc. announced plans that include generating a bit less cash than analysts had anticipated in
the next fiscal year while moving to further reduce the company’s head count.
The big maker of printers and personal computers, which is grappling with declines in those
markets, on Thursday disclosed plans during a meeting with analysts to cut 3,000 to 4,000
employees from its payroll over the next three years.

HP, formed in the breakup of Hewlett-Packard Co. a year ago, has trimmed about 3,000
employees since then. The company, which employs about 50,000 people, said it expects some
people affected by the latest moves to keep similar jobs at separate companies that take over
some HP operations on an outsourced basis.

HP said it expects the restructuring to generate $350 million to $500 million in charges and
produce annual savings of $200 million to $300 million starting in fiscal 2020.

Aided by the effects of prior cost-cutting and other actions, the company told analysts it expects
to increase its quarterly dividend by 7% in fiscal 2017 and report earnings in line with Wall
Street expectations.

But HP executives acknowledged that they might disappoint some analysts with regard to free
cash flow, a measure of the money left over after a company pays operating expenses. The
company’s shares have risen for much of 2016, in large part because of analyst expectations
about improvements in that metric.

The company said it expects to generate $2.3 billion to $2.6 billion in free cash flow in the fiscal
year ending in October 2017. That compares with analysts’ average estimate of $2.76 billion for
fiscal 2017 and $2.27 billion in the year ending in October, according to FactSet.

Cathie Lesjak, HP’s chief financial officer, attributed the estimate largely to the company’s
success in the current fiscal year converting balance sheet items such as inventory into cash more
quickly. Keeping up that pace of improvement, she said, will be difficult.

“It turns out to be a bit of a headwind,” Ms. Lesjak said in an interview ahead of the analyst
meeting in New York.

Ms. Lesjak said HP expects to return 50% to 75% of free cash flow to shareholders through
dividends and share repurchases in fiscal 2017, a target the company has said it expects to

exceed in the current fiscal year. HP plans to boost its share-buyback authorization by $3 billion,
she said.

The company’s stock, up nearly 30% this year through Wednesday’s market close, declined 2%
in Thursday after-hours trading following the announcements.

Dion Weisler, HP’s chief executive, stressed that the company is taking market share in personal
computers and expects to spur long-term growth in printers. The company in September agreed
to buy ​Samsung Electronics​ Co.’s ​printer business for $1.05 billion​, a deal designed to bolster
HP’s offerings in high-volume devices that handle both printing and copying for office work
Still, Mr. Weisler acknowledged that demand remains weak in both businesses. “As I look
forward to 2017, our assumptions are that the markets are going to continue to be pretty
challenged,” he said.

The company estimated it will report per-share earnings of $1.55 to $1.65 in its next fiscal year,
excluding one-time items such as restructuring charges. Analysts on that basis had $1.64 a share
for fiscal 2017, up from $1.61 a share in fiscal 2016, according to FactSet.