Hewlett Packard Enterprise (HPE) is slashing 5,000 jobs to lower costs, according to Bloomberg. In percentage terms, this would mean cutting about 10% of its workforce, including those in the United States and overseas. The report states that HPE will start handing out pink slips to employees before the end of the year.
“The moves are all part of an effort to make HPE more responsive to a changing industry that’s under pressure from cloud providers such as Amazon.com Inc. and Alphabet Inc.’s Google,” reports Bloomberg.
HPE has operations and offices around the world, including countries like Brazil, China and Switzerland. HPE was spun off from HP in 2015 as a separate company under Meg Whitman. HPE has largely streamlined its business under her leadership, closing many of its Chinese businesses and consulting divisions.
However, investors have not been very excited about the changes made so far. To calm investors, Whitman told CNBC in June that HPE has completed “one of the largest transformations in American business history,” which will result in better profit margins toward the end of the year.
“With fewer lines of business and clear strategic priorities, we have the opportunity to create an internal structure and operating model that is simpler, nimbler and faster,” she said at that time.
HPE has been working as a separate entity for about two years, but it has resorted to layoffs a few times now. In June 2016, numerous veterans exited the company in a major restructuring.
Hewlett Packard Enterprise has set a target of saving $1.5 billion over three years, financial officer Tim Stonesifer said earlier this year. If the company continues to reduce its workforce at this same rate, it actually might reach this goal. At the time, Stonesifer stated that Whitman was looking to do it in tranches, eventually resulting in fewer business lines and a simpler operating model.
As part of its restructuring efforts, HPE also recently appointed a new global sales leader, Phil Davis. Davis’ appointment follows the exit of U.S. sales chief Jim Merritt and EMEA sales chief Andy Isherwood.
HPE President Antonio Neri said about Davis previously, “When we began the search for a new leader, I knew we needed someone who could inspire the team and create a clear vision for our sales force.”
HPE posted better-than-expected results for the quarter ending in July, fueled by higher sales of networking equipment. The revenue earned by the company’s enterprise group division, including its storage and networking businesses, stood at $6.79 billion, an increase of 3%. The company’s overall revenue came in at $8.21 billion, an increase of 2.5% and above the consensus estimates of $7.49 billion.
Recently, Hewlett Packard Enterprise also signed a strategic partnership with GE to offer GE Digital’s breakthrough digital industrial solutions at scale in the Middle East, Africa and Turkey. Under the agreement, which is for three years, the companies will focus on cyber-security solutions in operational technology and possibly foray into other digital solutions in the coming time.
On Thursday, HPE shares closed up 1.17% at $13.79. Year to date, the stock is down more than 40%.