HPE is to lay off an undisclosed number of staff to save its bottom line as the coronavirus pandemic makes it a bit unwell.
In in an earnings call for its second quarter ending 30 April 2020, HPE chief exec Antonio Neri said customer uncertainty has had a “significant impact” on revenues, with total turnover declining 15 percent year-on-year to $6 billion.
“We have taken a deliberate set of actions to protect our financial foundation, become a more agile organisation and align our sources to critical core businesses in areas of growth that accelerate our edge-to-cloud platform-as-a-service strategy. We have taken some immediate steps to reduce operating expenses that will protect our financial profile”, he told analysts.
These measures include cut salaries for all staff, effective from 1 July to 31 October. Neri and his executive team will take a pay cut of between 20 to 25 percent to their base salary with the amount of reduction to salaries then varying by level, he added.
Those employees in countries where pay reductions are not permitted will be instructed to take unpaid leave. Salary increases and external hiring will be put on hold, he added. HPE’s board of directors will each see their $100,000 a year retainers cut by a quarter.
Neri also announced the storage vendor’s “cost optimisation and prioritisation plan” during the call, which obliquely refers to “workforce realignment” and is expected to be implemented through its fiscal 2022.
“This plan will help us focus our investments and realign our workforce to areas of growth that will accelerate our strategy Some of the measures in the plan include continuing to streamline our product portfolio, implement new digital customer engagement models and optimising a workplace site strategy and experiences. As a result of the changes to the company’s workforce, real estate model and for the business process improvements, we estimate gross savings of at least $1 billion and annualized net run rate savings of at least $800 million by fiscal 2022 year-end.”
The number of job losses has not been decided yet.
“The company will spend the next few months working out the details and evaluating how much it can save in other areas.”
HPE saw revenues tumble in all its segments, with its Compute and High Performance Compute seeing the biggest year-on-year declines of 19 and 18 percent respectively.
Revenue slumps were attributed to supply chain disruption leading to $1.5 billion in order backlog across its portfolio.
