Hewlett Packard Enterprise's $1 Billion Cost-Cutting Plan Is Bold, but Raises Questions

Credit has to be given where it's due. Hewlett Packard Enterprise (NYSE: HPE) navigated a chaotic quarter about as well as any comparable company could. The coronavirus outbreak first rattled its supply chain, and then part of its customer base. By the time COVID-19 reached the United States, the world was simply winging it. Hewlett Packard Enterprise's 16% year-over-year sales decline for the quarter ending on April 30 could be considered a relative victory.

The company's plans to cut annual expenses by $1 billion, however, are not only aggressive but may also not be enough to matter. If the impact of the pandemic lingers, even if the virus itself doesn't, the company could lose more than that in annual sales, and far more than that in potential earnings.

Hewlett-Packard Enterprise's three-year cost optimization and prioritization plan aims for "estimated gross savings of at least $1 billion and annualized net run-rate savings of at least $800 million."

Source Fool.com