Hewlett Packard Enterprise lays out US$1 billion savings plan, pay cuts

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Hewlett Packard Enterprise lays out US$1 billion savings plan, pay cuts
Antonio Neri (HPE)

Hewlett Packard Enterprise has unveiled a plan targeting gross savings of at least US$1 billion (817.5 million pounds) by 2022 and cut the base salaries of top executives by 25 percent as the software maker seeks to weather the coronavirus crisis.

Shares, down about 35 percent this year, fell nearly 6 percent in extended trading after the company missed second-quarter revenue and profit estimates, hit by global lockdowns since February.

Chief Executive Officer Antonio Neri flagged concerns about cautious consumers and supply constraints during a post-earnings call.

Beginning July 1, through the remainder of fiscal year 2020, the base salaries of the CEO and officers at the executive vice president level will be reduced by 25 percent, HPE said.

The board also agreed to cut by 25 percent the portion of the annual US$100,000 cash retainer entitled by directors for the same period.

HPE will now focus on investments and realign its workforce to evolve with its supply chain and real estate strategies, as well as right-size the business.

"My expectation is at least 50 percent of our employees will never come back to an office," Neri said on the call.

HP, which in April withdrew its 2020 forecast, posted second-quarter adjusted earnings of 22 cents per share, missing the average analyst estimate of 29 cents, according to IBES data from Refinitiv.

Revenue of US$6.01 billion also missed estimate of US$6.29 billion.

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