Shares of Hewlett Packard Enterprise (HPE) plummeted 21.27% in pre-market trading on Friday, following the company's disappointing first-quarter results and weak guidance, as well as plans to cut jobs in response to escalating trade tensions.

For the quarter ended January 31, HPE reported revenue of $7.85 billion, up 16% year-over-year, slightly exceeding analysts' expectations. However, adjusted earnings per share of $0.49 fell short of the consensus estimate of $0.50, impacted by execution issues in its server business and pricing/discounting challenges.

The bigger blow came from HPE's guidance for the second quarter and full fiscal year 2025, which was significantly weaker than anticipated due to the ongoing trade tensions and tariff uncertainty impacting its server and data center business. For Q2, HPE projected revenue in the range of $7.2 billion to $7.6 billion, well below the $7.93 billion consensus estimate. Adjusted earnings per share for Q2 are expected to be between $0.28 and $0.34, compared to the $0.50 estimate.

For the full fiscal year 2025, HPE forecasts revenue growth of 7% to 11%, implying adjusted earnings per share of $1.70 to $1.90, missing the $2.13 consensus estimate. The company attributed the lackluster guidance to the highly fluid tariff situation, which has created challenges for its server and data center operations. HPE expects to adjust product prices and leverage its global supply chain to mitigate the impact of tariffs, but acknowledged that the situation is fluid and could have a more significant effect in the near term.

To address the rising costs and uncertainty, HPE announced a cost reduction program aimed at delivering gross savings of approximately $350 million by fiscal 2027. The plan involves workforce reductions, with the company estimating that around 5% of its global workforce, or roughly 3,000 employees, will be cut. HPE expects to incur charges of around $350 million related to the restructuring, with $250 million to be incurred in fiscal 2025.