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May 21, 2020

HPE reports declining sales, issues three-year cost-cutting plan

Hewlett-Packard Enterprise Inc. signage stands at the entrance of the company's headquarters in Palo Alto, California, U.S., on Monday, May 22, 2016.

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Hewlett Packard Enterprise Co. reported declining sales, and said it would “realign the workforce” and cut costs over the next three years, signalling that the stumbling global economy has dented demand for servers.

Revenue fell 16 per cent to US$6 billion in the period ended April 30, the San Jose, California-based company said Thursday in a statement. Analysts, on average, expected US$6.19 billion, according to data compiled by Bloomberg. Profit, excluding some items, was 22 cents US a share, compared with an average estimate of 28 cents US.

The company said it was putting in place a plan to cut costs, with a goal of US$1 billion in savings by the end of fiscal 2022. Measures will including simplifying its product portfolio and supply chain as well as changing customer support, marketing efforts and real estate strategies, HPE said in the statement.

HPE withdrew its annual profit forecast last month, citing uncertainty from the COVID-19 pandemic, which has forced millions of people to stay home to prevent the spread of the virus.

Chief Executive Officer Antonio Neri has struggled to spark sales growth at the computing and networking company, which has seen year-over-year revenue decline in all but one quarter since the company split from HP Inc. in 2015. Competing with larger hardware rival Dell Technologies Inc. and dominant cloud-computing companies such as Inc. and Microsoft Corp., HPE has hitched its future to edge computing, which distributes data-processing capacity closer to customers rather than at centralized data centers. More immediately, the company has sought to support sales by offering US$2 billion of financing for clients trying to preserve cash in the pandemic.

HPE’s shares dropped about five per cent in extended trading after closing at US$10.36 in New York. The stock has dropped 35 per cent this year.