Hewlett Packard To Reduce Workforce, Slash Salaries
Hewlett Packard Enterprise (NYSE: HPE), while announcing its Q2 2020 results, said it would temporarily slash salaries and carry out job cuts.
What Happened
As sales decline due to the ongoing coronavirus pandemic, HPE, the maker of business technology hardware and software, will institute measures to effect a turnaround.
The company’s overhaul plan is expected to save it $1 billion by 2022.
The salary cuts would mostly affect senior executives and will take place between July 1 and October 31, 2020. “We are going to cut salaries, that’s not an easy thing to do,” said HPE CEO Antonio Neri during a conference call with analysts. He added, “I don’t take that lightly.”
No specifics on job cuts have been forthcoming from HPE, but a company spokesperson told Fortune that HPE would be “working through the details in the next couple months as we evaluate the various areas where we can drive savings.”
Why It Matters
According to Fortune, HPE on its own and also as a part of the Hewlett Packard conglomerate, has laid off thousands of workers as a changing technology landscape means a fall in demand for servers and computer storage devices.
In the previous quarter, HPE sales fell 16% on a year-over-year basis to $6 billion. The CEO attributed the decline to the disruption in the supply chain, causing the inability of HPE to ship products rapidly.
He said, “We ship three servers every minute, so when the supply chain stops, it’s pretty significant.”
Neri also said that shelter-in-place orders have made it difficult for HPE employees to install supercomputers at customer premises, which significantly affected the revenue.
The CEO expressed some optimism for the future saying, “China is pretty much back to normal.” This would mitigate some of the disruptions to the company’s supply chain.
HP Price Action
HPE shares traded 5.41% lower at $9.80 in the after-hours session on Thursday. The shares had closed the regular session 0.78% higher at $10.36.
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