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HPE Plans of Retrenching 5,000 Jobs to Streamline Costs
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According to Bloomberg report, Hewlett Packard Enterprise Company (HPE - Free Report) is planning to slash 5,000 jobs in a desperate bid to contain costs and take restructuring efforts to the next level. This is almost 10% of the total staff employed by the company.
These retrenchment actions are being taken by management to save costs, as HPE faces intense competitionfrom cloud providers such as Amazon.com Inc. (AMZN - Free Report) and Alphabet Inc. (GOOGL - Free Report) .
CEO Meg Whitman has been reorganizing operations to boost profits and this layoff is a part of that strategy adopted by her earlier this month to reach $1.5 billion in savings. Reportedly, the layoffs will “target workers in the U.S. and around the world. Managers are also said to be included in these layoffs.“
Notably, during second-quarter fiscal 2017, the company closed the spin-merger of its Enterprise Services business, which merged with Computer Sciences to create DXC Technology (DXC - Free Report) .).
Additionally, the company completed the pending spin-merger of its Software business in August this year.
Price performance
Shares of HPE gained more than 3% during yesterdays’ trading session.
Notably, although the entire industry, to which Hewlett Packard Enterprise belongs to, has been underperforming, the stock is among the worst performers. During the year-to-date period, the stock has declined 38.4% of its value, wider than the industry’s loss of 17.8%.
Bottom Line
We believe HPE management’s decision of executive lay-off is a bold one, going a step ahead of what it has done earlier. Such a notable job cut will clearly save money for the company, which, consequently, can be reinvested to further boost growth of its cloud-based and cybersecurity business.
However, we remain doubtful about the extent to which this decision will be an optimally cost-efficient one, at least in the near term, as it will take some time to effectively take up the burden of work from the existing ones.
Currently, Hewlett Packard Enterprise carries a Zacks Rank #4 (Sell).
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HPE Plans of Retrenching 5,000 Jobs to Streamline Costs
According to Bloomberg report, Hewlett Packard Enterprise Company (HPE - Free Report) is planning to slash 5,000 jobs in a desperate bid to contain costs and take restructuring efforts to the next level. This is almost 10% of the total staff employed by the company.
These retrenchment actions are being taken by management to save costs, as HPE faces intense competitionfrom cloud providers such as Amazon.com Inc. (AMZN - Free Report) and Alphabet Inc. (GOOGL - Free Report) .
CEO Meg Whitman has been reorganizing operations to boost profits and this layoff is a part of that strategy adopted by her earlier this month to reach $1.5 billion in savings. Reportedly, the layoffs will “target workers in the U.S. and around the world. Managers are also said to be included in these layoffs.“
Notably, during second-quarter fiscal 2017, the company closed the spin-merger of its Enterprise Services business, which merged with Computer Sciences to create DXC Technology (DXC - Free Report) .).
Additionally, the company completed the pending spin-merger of its Software business in August this year.
Price performance
Shares of HPE gained more than 3% during yesterdays’ trading session.
Notably, although the entire industry, to which Hewlett Packard Enterprise belongs to, has been underperforming, the stock is among the worst performers. During the year-to-date period, the stock has declined 38.4% of its value, wider than the industry’s loss of 17.8%.
Bottom Line
We believe HPE management’s decision of executive lay-off is a bold one, going a step ahead of what it has done earlier. Such a notable job cut will clearly save money for the company, which, consequently, can be reinvested to further boost growth of its cloud-based and cybersecurity business.
However, we remain doubtful about the extent to which this decision will be an optimally cost-efficient one, at least in the near term, as it will take some time to effectively take up the burden of work from the existing ones.
Currently, Hewlett Packard Enterprise carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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