HPE plans to lay off thousands of employees despite the increase in results.
It is estimated that around 3,000 HPE employees could be affected by layoffs and workforce reductions.
Hewlett Packard Enterprise (HPE) has announced plans to lay off approximately 2,500 employees as part of a series of adjustments following disappointing economic performance. CEO Antonio Neri indicated that a total of 3,000 workers are expected to leave the company, with 500 of those exits attributed to attrition. This announcement came after a 19% drop in the company’s stock during extended trading, following the release of lackluster guidance during its quarterly earnings call.
Reducing its workforce will result in HPE facing an estimated cost of about $350 million over the next two years, although the company expects to see the benefits of this restructuring by 2027. Marie Myers, HPE's CFO, noted that the company met revenue expectations, achieving $7.9 billion in the most recent period that ended on January 31, 2025.
For the upcoming quarter, HPE projects revenue between $7.2 billion and $7.6 billion, a figure that, even at its upper end, represents a decline from previous periods. Despite the increase in demand driven by artificial intelligence, high costs of related components have impacted profit margins. Additionally, the company has seen an increase in inventory due to Nvidia's transition to Blackwell GPUs, which has necessitated discounts on less attractive servers.
However, HPE is not the only company in the conglomerate facing challenges, as its parent company, HP, laid off nearly 2,000 employees a few weeks ago. There are also legal challenges for HPE; despite approval from the EU, antitrust regulators in the UK and the US have expressed concerns regarding the $14 billion acquisition of Juniper, claiming that the merger could represent over 70% of the market.
A spokesperson for HPE issued an official statement saying that "as part of our first-quarter results for fiscal year 2025, we have announced cost-saving measures that the company will implement to strengthen our financial profile, better aligning our cost structure with our business mix and long-term strategy." The plan includes reducing the employee base by about 5% over the next 12 to 18 months. The company emphasized that these decisions are difficult and is committed to managing all transitions with care and compassion.
