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Why HPE Could Lay off More Employees

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HPE to cut 10% of its workforce

Hewlett Packard Enterprise (HPE) is planning to cut 10% of its workforce—about 5,000 jobs—by the end of this year. The company is trying to cut expenses in light of the stiff competition eroding its profitability.

Earlier this year, the company announced the “HPE Next” program, in which it plans to weed out ~$1.5 billion in expenses over the next three years. The company would redirect that money by investing in fast-growing areas like IoT (Internet of Things), cybersecurity, and AI (artificial intelligence).

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HPE’s earnings are dwindling

The company’s CEO (chief executive officer), Meg Whitman, has been overseeing the company’s divisions for the past three years. The company’s personal computers and printers units are now a part of HP Inc. (HPQ), while its business services and software divisions make up Hewlett Packard Enterprise. The recent split aimed to make HP Enterprise more receptive to a swiftly evolving sector that’s under pressure from cloud service providers.

The company announced its quarterly results earlier this month, and HPE generated revenues of $8.2 billion in its fiscal 3Q17 (quarter ended July 31, 2017), which represents a 3% YoY (year-over-year) rise after adjusting for divestitures. However, HPE’s earnings fell YoY, with EPS (earnings per share) of $0.31 in fiscal 3Q17, compared with $0.40 in fiscal 3Q16.

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