Dive Brief:
- Hewlett Packard Enterprise (HPE) announced plans to cut about 10% of its workforce, or roughly 5,000 employees, reports Bloomberg. The plan comes alongside the company's growing market expenses.
- The cuts are expected to occur before 2018 and will include both American and international workers. It is said to be a part of CEO Meg Whitman's plan to save HPE about $1.5 billion, according to Data Economy.
- HPE has yet to issue a statement regarding the matter.
Dive Insight:
Since HPE's November 2015 split with HP, the enterprise-specific organization has been on a path of reinvention but has faced several setbacks. HPE saw a 13% decrease in earnings in June compared to the same quarter in 2016. Server revenue slid by 9.4% year-over-year, yet the company remains the top server provider for the enterprise, closely followed by Dell EMC.
Whitman defends the continued drop as a natural side effect of the company's transition. Speculation has swirled around HPE losing its supposed "tier 1 service provider", Microsoft. Last year, Microsoft reportedly bought between $2-2.5 billion worth of HPE servers.
HPE can't survive on hardware alone, despite its legacy reputation. HPE's layoff is believed to be part of Whitman's bottom-line approach to redesign the company's products and services as more companies remove on-premise infrastructure in favor of digitized storage and functions. More companies are transitioning to the cloud or leveraging new partnerships that offer hybrid cloud solutions.
HPE divested $8.8 billion of software to Micro Focus in September, resulting in the world's seventh largest pure-play software company software. The software branches will combine work of DevOps, hybrid IT, security management and predictive analytics.
