Actions of Hewlett Packard Enterprise (NYSE: HPE) Friday collapsed after the company announced failed second-quarter financial results and announced plans to cut costs over the next three years. The tech title was down about 11.5% at 12:50 p.m. EDT.
HPE reported second-quarter revenue of $ 6.0 billion, down 16% year-over-year and $ 280 million lower than analysts’ average estimate. The company faced supply chain constraints and delays in customer acceptance, which significantly increased the order book. Turnover in the IT segment, HPE’s largest, fell 19% to $ 2.6 billion.
Non-GAAP earnings per share (adjusted) was $ 0.22, down from $ 0.42 for the same period last year and $ 0.07 less than analysts were waiting. Adjusted earnings exclude $ 1.1 billion ($ 0.86 per share) of expenses primarily due to goodwill impairment.
HPE has taken immediate steps to reduce costs, including salary cuts for board members and officers. The company also announced a three-year plan to further cut costs. HPE plans to realize gross savings of at least $ 1 billion, driven by changes in the workforce and improvements in business processes. Cost reductions will require total cash payments of between $ 1.0 billion and $ 1.3 billion until 2022.
HPE withdrew its full-year forecast in April, and the company declined to provide new recommendations for the third quarter or for 2020, as well as its results report. According to a statement from HPE CEO Antonia Neri:
We are taking decisive action to navigate short-term uncertainty, while ensuring that resources are aligned with priority growth areas so that we are well positioned to accelerate our edge to the cloud strategy and meet the needs of our customers in a post-COVID-19 world.
Taking into account Friday’s collapse, HPE stocks are now down about 48% from their 52-week high.