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Hewlett Packard to cut 30,000 jobs to save $2.7 billion annually

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Meg Whitman
Restructuring   A strategy update and financial outlook for new HP

At HP's 2015 Securities Analysts Meeting, the future Hewlett Packard Enterprise Company leadership team provided a strategy update and financial outlook for the new company.

The new Hewlett Packard Enterprise will have more than $50 billion in annual revenue.
Meg Whitman, current chairman, president and chief executive officer of HP, who will become president and chief executive officer of Hewlett Packard Enterprise, gave an overview of how the new company will build on its leading position in infrastructure, software, services and cloud.

The new Hewlett Packard Enterprise will have more than $50 billion in annual revenue and will be focused on delivering unrivaled integrated technology solutions to a market that has the potential to exceed $1 trillion over the next three years. Hewlett Packard Enterprise will trade under the ticker symbol HPE.

Tim Stonesifer, who will become chief financial officer of Hewlett Packard Enterprise, provided a financial outlook for Hewlett Packard Enterprise in fiscal 2016.

As a standalone company, Hewlett Packard Enterprise expects fiscal 2016 revenue to grow year-over-year in constant currency driven by continued strength in servers, storage and networking, and stabilization in services and software. The company anticipates currency impact to be a three point headwind to revenue growth in fiscal 2016.

Hewlett Packard Enterprise anticipates operating profit dollars to grow year-over-year in fiscal 2016, due to the continued focus on supply chain productivity, disciplined approach to discretionary spending and efforts to reshape the workforce.

The new company estimates fiscal 2016 non-GAAP diluted net EPS to be in the range of $1.85 to $1.95, and estimated GAAP diluted net EPS to be in the range of $0.75 to $0.85.

Fiscal 2016 non-GAAP diluted net EPS estimates exclude after-tax costs of $1.10 primarily related to restructuring charges, separation costs and amortization of intangible assets.

Stonesifer presented a plan to deliver $2.7 billion in ongoing annual cost reductions both associated with the separation and specific to the Enterprise Services (ES) business.

These new activities will enable Hewlett Packard Enterprise to achieve $0.7 billion of ongoing cost savings associated with the separation, including adjustments to real estate strategy and other reorganizations across the portfolio.

In addition, it will enable ES to achieve $2 billion of gross annualized cost reductions, helping ES achieve a long-term, sustainable 7-9% operating profit margin.

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

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


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