Layoffs cloud future of HP Enterprise
As Hewlett Packard Enterprise struggles to compete in a business-technology industry rapidly shifting to the cloud, the Palo Alto company plans to lay off about 10 percent of its workforce.
The cuts — which will reportedly affect at least 5,000 employees in the U.S. and overseas, according to Bloomberg — are expected to begin before the end of the year.
Hewlett Packard Enterprise was spun out of Hewlett-Packard in 2015, in an attempt to focus on hardware and cloud services sold to other big businesses. But even with Silicon Valley veteran Meg Whitman, the former CEO of eBay, at the helm, the company has struggled to forge its own identity since the split, leading to a tumultuous few years of restructuring and cost cutting.
A Hewlett Packard Enterprise representative did not respond to multiple requests for com-
ment.
The California Employment Development Department said it has not been notified about layoffs at Hewlett Packard Enterprise in the past year. Under the California Worker Adjustment and Retraining Notification Act, companies must notify the department if they plan mass layoffs within 60 days.
The last time the company notified the department about layoffs was in 2016, when it cut 208 employees in Sunnyvale. Besides its Palo Alto headquarters, the company also has local offices in Cupertino and Fremont.
While it is unclear where the layoffs will be focused, Renny Ponvert, CEO and director of research at Management CV, which provides research on corporate executives, said the company will likely focus on cutting contractors first.
However, even if the layoffs help the company reduce costs in the short term, Ponvert said he is skeptical the cuts will actually help the company compete with the likes of Amazon.com and Google — especially when it comes to attracting and retaining new talent.
“You want to go where the action is. Winning has a momentum in and of itself, and that’s where the real talent wants to be,” Ponvert said. “HPE is sending all of the reverse signals — it looks like a mature-to-declining business where it is having to serially reduce its staff and costs just to even stay in the marketplace.”
Hewlett Packard Enterprise is a relative newcomer in fields like cloud technology and big data and faces fierce competition from Amazon, IBM, Microsoft, Google and Oracle. In an effort to streamline the company, Whitman spun off some of its software assets. It also combined its technology services division with Computer Sciences Corp., a deal that is expected to close this year.
Chief Financial Officer Tim Stonesifer foreshadowed the layoffs on a call with analysts this month, saying the company is targeting $1.5 billion in savings over a three-year period. On the same call, Whitman said the company is looking to cut “layers” in the organization to become more nimble and efficient.
After two years of spin-offs, cost-cutting and various stumbles, analysts say investors are beginning to get impatient.
“For a number of years that Meg has been involved, they have done a lot of splitting apart of the company,” said Dave Heger, a senior equity analyst at financial-services firm Edward Jones. “It’s now come to the point where it’s like ‘OK Meg, what are you going to do to turn around what’s left?’ ”