UPDATED 23:37 EDT / SEPTEMBER 21 2017

INFRA

Report: HPE to shed 5,000 jobs, or 10% of its staff, by year-end

Enterprise information technology giant Hewlett Packard Enterprise Co. is about to downsize once again, with reports emerging that it’s planning to shed about 10 percent of its workforce, or 5,000 people.

Bloomberg, which first reported the cost-cutting measure, citing people familiar with the matter, said the job cuts will begin before the end of this year. The cuts will likely affect both U.S. and overseas staff, and will include some senior managers, Bloomberg added.

HPE declined to comment on the report, but recent comments from Chief Executive Officer Meg Whitman (pictured), and other moves the company has made since its 2015 split from Hewlett-Packard Inc., suggest the news could well be true.

During HPE’s most recent quarterly earnings call, which saw its share price rise after beating revenue and earnings targets, Whitman made it clear that further changes are coming. She told analysts that she’s pushing to cut “layers” in the organization and become more efficient. “With fewer lines of business and clear strategic priorities, we have the opportunity to create an internal structure and operating model that is simpler, nimbler and faster,” she said.

Whitman has already dumped numerous businesses since the 2015 split, including certain services and software units that were once seen as central to the company’s offerings. They include the HPE’s main software business, which was spun off to U.K. firm Micro Focus International plc. in a deal valued at $8.8 billion, and also the company’s Cloud Foundry and OpenStack assets, which were sold to Linux provider SUSE for an undisclosed price last December.

Whitman has justified these moves, saying they’re part of an effort to make HPE more responsive in a tech industry that’s been transformed in the last few years by the rise of cloud computing and new industry giants such as Amazon Web Services Inc. and Google Inc. But the CEO’s actions have yet to result in much tangible success so far, even though the firm’s most recent earnings report gives her more reason to be optimistic that her efforts will ultimately pay off.

“If the reports are true, it is sad what has happened to HPE,” said Holger Mueller, vice president and principal analyst at Constellation Research Inc.

Mueller said that although HPE has successfully weathered numerous industry changes in the past, it seems to be losing out in this latest transition where the focus is on things such as artificial intelligence, big data and cloud computing.

“At some point the writing was on the wall with the end of Helion [HPE’s OpenStack cloud product] and with the sale of the software assets,” Mueller said.

He added that the key for HPE going forward is to find a way to get major cloud providers such as AWS and Microsoft Corp. interested in their gear. “If customers don’t buy on-premises servers because their workloads are going to the cloud, HPE has to find a way to sell to those cloud providers instead. But it’s a very different business compared to selling to large enterprises.”

Image: HPE

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