Hewlett Packard Enterprise (HPE) is reportedly planning to layoff around 2,500 employees over the next year and a half, media reports said. The decision is being taken in an effort to reduce costs after the company clocked underwhelming financial results in the latest quarter, reported CNBC.

In its latest earnings report, the firm said that its revenue climbed 16 per cent from last year, however, CEO Antonio Neri stated that their performance could have been better. The executive said that the firm had an abundance of AI servers in stock as it was shifting to the newer models which use Nvidia’s latest chips, while its traditional servers were sold at discounted prices, in turn, impacting profits.

The firm deals in manufacturing equipment for data centers such as servers that store and manage huge amounts of data. Disappointed with its outlook, investors expressed their dismay and the stock price of the firm plunged 19 per cent on Thursday, the report noted. In its outlook, the company said that it expects to make less profits than analysts’ hoped for in 2025.

Higher Costs, Profitability Issues, And More: Hewlett Packard's Obstacles

The report further said that the company is slashing these jobs in hopes of saving money. The layoffs are expected to impact nearly 5 per cent of the overall workforce. As of October 2024, the company employed 61,000 individuals.

It further intends to lower expenses by $350 million by 2027. Additionally, other problems such as reducing prices for its older products impacting profitability and a legal tussle with the US government have made things harder for the company. The American government is notably trying to put a pause to HPE’s purchase of Juniper Networks worth $14 billion. 

Further, escalated costs due to US tariffs could end up making the company’s products more expensive, the report noted.