By Denny Jacob

Hewlett Packard Enterprise shares are tumbling after investors consider a number of challenges facing the company including tariffs.

Shares were trading around $15.29, down about 15%. The stock is down about 17% over the last year.

The server and cloud-software company on Thursday plans to cut about 5% of its workforce, part of a broader cost-reduction program expected to deliver $350 million in savings by fiscal 2027. This comes as it prepares for near-term profit to be dragged down in part by tariffs.

Chief Financial Officer Marie Myers said HPE expects some pricing adjustments to come as a way to mitigate some of the pressure from tariffs, the latest of which is reflected in its outlook. Such measures would mean higher prices for consumers and the question of whether they would accept such conditions, a scenario playing out at companies across the economy as they consider the implications of the latest tariffs.

HPE's outlook was also weaker than Wall Street expected, a combination of pricing and discounting challenges as well as inventory management as the company transitions to using Nvidia's Blackwell chip.

Analysts at J.P. Morgan said that while headwinds to the full year guidance are more modest than investors might have feared, the bigger variance to expectations comes from the materially low margin for traditional servers with the headwinds from discounting impact that vast majority of the fiscal year.

"While the discounting-led headwinds the company is facing appear to be in some regards company-specific execution challenges… it raises concerns in relation to exacerbating an already aggressive pricing backdrop in the market which challenges profitability for not only HPE, but also peers," say the analysts.

Write to Denny Jacob at denny.jacob@wsj.com

(END) Dow Jones Newswires

March 07, 2025 09:40 ET (14:40 GMT)

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