HP Details Hewlett Packard Enterprise Outlook, To Cut About 30K More Jobs

(RTTNews) - Hewlett-Packard Co (HPQ) on Tuesday provided its fiscal 2016 guidance for Hewlett Packard Enterprise, the corporate technology unit being spun off from HP, and expects the newly carved division to eliminate up to 30,000 jobs as part of cost saving measures.

"These restructuring activities will enable a more competitive, sustainable cost structure for the new Hewlett Packard Enterprise," said Meg Whitman, current chairman and chief executive officer of HP, who will become CEO of Hewlett Packard Enterprise.

"We've done a significant amount of work over the past few years to take costs out and simplify processes and these final actions will eliminate the need for any future corporate restructuring," Whitman said.

HP shares slid 2.5 percent in after-hours trade on the New York Stock Exchange.

HP expects Hewlett Packard Enterprise to report fiscal 2016 net earnings of $0.75 to $0.85 per share, and adjusted earnings of $1.85 to $1.95 per share, which exclude restructuring charges, among other items.

Tim Stonesifer, who will become chief financial officer of Hewlett Packard Enterprise, said the company expects $2.7 billion in ongoing annual cost reductions both associated with the separation and specific to the Enterprise Services ("ES") business.

To achieve the savings, Hewlett Packard Enterprise expects 25,000 to 30,000 people to leave the company, primarily associated with the ES transformation.

The restructuring will result in a GAAP-only charge of about $2.7 billion, beginning in the fourth quarter fiscal 2015. The cash impact will be about $2.6 billion over the next three years, beginning in fiscal 2016.

Earlier too, HP had cut thousands of jobs to shore up margins, at a time of waning PC demand as consumers shift their preference to smartphones.

Shedding light on Hewlett Packard Enterprise's cloud strategy, Whitman said the segment's fiscal 2015 revenue is expected at about $3 billion, a growth of over 20 percent annually for the next several years.

HP is separating into two companies on November 1. The Hewlett Packard Enterprise division, with more than $50 billion in annual revenue, will provide the technology solutions customers need to optimize their traditional IT. The other company, HP Inc will be a personal systems and printing company. Hewlett Packard Enterprise will trade under the ticker symbol "HPE".

HPQ is trading at $27.11, up $0.07 or 0.26%, on the NYSE. In after hours, the stock dropped $0.69 or 2.55% at $26.42.