Hewlett Packard Enterprise (HPE) has presented several cost cutting measures to handle the pressure from Covid-19 crisis.
HPE said it will cut the base salary of the chief executive officer, and executive vice presidents by 25 percent, and senior vice presidents by 20 percent for the period beginning on July 1, 2020 through the remainder of fiscal year 2020.
The Board also agreed to cut by 25 percent the portion of the annual $100,000 cash retainer to which each director is entitled for the period beginning on July 1, 2020 through the remainder of fiscal 2020.
HPE also announced a cost optimization and prioritization plan to focus HPE’s investments and realign the workforce to areas of growth, including measures to simplify product portfolio strategy, go-to-market configurations, supply chain structures, digital customer support model and marketing experiences, and real estate strategies.
HPE expects that the plan will be implemented through fiscal year 2022. HPE estimates it will achieve annualized net run-rate savings of at least $800 million by fiscal year 2022-end from changes to the company’s workforce, real estate and business process improvements.
HPE reported 16 percent dip in revenue to $6 billion in its fiscal 2020 second quarter, ended April 30, 2020.
The drop in revenue was driven primarily by supply chain constraints and delays in customer acceptance, which resulted in significantly higher levels of backlog, particularly in Compute, HPC & MCS, and Storage.
“The economic lockdowns since February significantly impacted our fiscal Q2 financial performance,” said Antonio Neri, president and CEO of HPE. “We exited Q2 with $1.5 billion dollars in orders across the portfolio, representing two times the average historical backlog1.”
HPE GreenLake, as-a-service offering, gained traction with 17 percent ARR growth and its Intelligent Edge business grew 12 percent in North America outperforming the market while expanding margins.
HPE generated revenue of $665 million (–2 percent) from Intelligent Edge, $2.6 billion (–19 percent) from Compute, $589 million (–18 percent) from High Performance Compute & Mission Critical Systems (HPC & MCS), $1.1 billion (–16 percent) from Storage, $237 million (–8 percent) from Advisory & Professional Services (A&PS) and $833 million (–5 percent) from Financial Services.