Hewlett Packard Enterprise (HPE) is letting go of around 2,500 employees over the next year and a half. The company is doing this to cut costs after disappointing financial results, according to a CNBC report. On Thursday, its stock price dropped by 19 per cent because investors were not happy with the company’s future outlook.
HPE makes data center equipment, like servers that store and manage huge amounts of data. The company recently shared its earnings report for the last three months, and while the numbers weren’t terrible, they weren’t great either.
Even though revenue grew 16 per cent from last year, CEO Antonio Neri admitted that things could have gone better. The company had too many AI servers in stock because it was switching to newer models using Nvidia’s latest chips. Meanwhile, traditional servers had to be sold at discounted prices, which hurt profits.
HPE is cutting jobs to save money. The company hopes to reduce expenses by $350 million by 2027. These layoffs will affect about 5% of its employees. As of October 2024, HPE had 61,000 workers.
HPE is also struggling with a dozen other problems, such as falling prices for its older products, making it harder to earn profits, a legal battle with the U.S. government, which is trying to block its $14 billion purchase of another company, Juniper Networks, higher costs due to U.S. tariffs (import taxes), which could make its products more expensive. Looking ahead, HPE expects to make less profit than analysts were hoping for in 2025, which is another reason its stock price fell.
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