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Chief Executive Officer Antonio Neri flagged concerns about cautious consumers and supply constraints during a post-earnings call. Beginning July 1, through the remainder of fiscal year 2020, the base salaries of the CEO and officers at the executive vice president level will be reduced by 25%, HPE said. HPE will now focus on investments and realign its workforce to evolve with its supply chain and real estate strategies, as well as right-size the business.

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The latest U.S. government action against China’s Huawei takes direct aim the company’s HiSilicon chip division–a business that in a few short years has become central to China’s ambitions in semiconductor technology but will now lose access to tools that are central to its success. Huawei Technologies Co Ltd for its part denounced the U.S. allegations and called the new measures “arbitrary and pernicious.” Established in 2004, HiSilicon develops chips mostly for Huawei, and for most of its existence has been an afterthought in a global chip business dominated by U.S., Korean and Japanese companies.

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(Bloomberg) — Hewlett Packard Enterprise Co. reported declining sales, and said it would “realign the workforce” and cut costs over the next three years, signaling that the stumbling global economy has dented demand for servers.Revenue fell 16% to $6 billion in the period ended April 30, the San Jose, California-based company said Thursday in a statement. Analysts, on average, expected $6.19 billion, according to data compiled by Bloomberg. Profit, excluding some items, was 22 cents a share, compared with an average estimate of 28 cents.The company said it was putting in place a plan to cut costs, with a goal of $1 billion in savings by the end of fiscal 2022. Measures will including simplifying its product portfolio and supply chain as well as changing customer support, marketing efforts and real estate strategies, HPE said in the statement.“It definitely was a tough quarter by every measure and I’m disappointed in the performance, but I don’t see this as an indication of our capabilities,” Chief Executive Officer Antonio Neri said in an interview. “This was clearly driven by supply chain disruptions because of coronavirus,” including a shortage of chip components from China, disrupted logistics and social-distancing guidelines in some regions.Neri said he expected HPE’s sales to “recover sequentially,” with the third quarter posting better results than the second and the fourth improving further. Still, he said, it’s unknown just how bad the economic downturn will be.HPE withdrew its annual profit forecast last month, citing uncertainty from the Covid-19 pandemic, which has forced millions of people to stay home to prevent the spread of the virus.Neri has struggled to spark sales growth at the computing and networking company, which has seen year-over-year revenue decline in all but one quarter since the company split from HP Inc. in 2015. Competing with larger hardware rival Dell Technologies Inc. and dominant cloud-computing companies such as Amazon.com Inc. and Microsoft Corp., HPE has hitched its future to edge computing, which distributes data-processing capacity closer to customers rather than at centralized data centers. More immediately, the company has sought to support sales by offering $2 billion of financing for clients trying to preserve cash in the pandemic.Under the company’s plan to reduce expenses, senior executives including Neri will take 20% to 25% cuts to their base salaries and the board reduced each director’s cash retainer by 25% from July to the end of the fiscal year. The hardware maker will consolidate offices where possible, Neri said. He expects more than half of HPE’s employees won’t return to the office full time, instead dropping in for meetings and collaboration when necessary.The number of employees who may lose their jobs under the cost-cutting plan is undetermined, Neri said. The company will spend the next few months working out the details and evaluating how much it can save in other areas.In the fiscal second quarter, HPE reported falling revenue in all of its business segments. Server sales dropped 20% to $2.64 billion and storage hardware declined 18%. Neri said the company saw “steady” demand from large enterprises while small and mid-sized businesses struggled. HPE wasn’t able to produce as much data-center hardware as clients were ordering, he said.HPE’s shares dropped about 5% in extended trading after closing at $10.36 in New York. The stock has dropped 35% this year.(Updates with comments from CEO in the fourth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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(Bloomberg) — Hewlett Packard Enterprise Co. reported declining sales, and said it would “realign the workforce” and cut costs over the next three years, signaling that the stumbling global economy has dented demand for servers.Revenue fell 16% to $6 billion in the period ended April 30, the San Jose, California-based company said Thursday in a statement. Analysts, on average, expected $6.19 billion, according to data compiled by Bloomberg. Profit, excluding some items, was 22 cents a share, compared with an average estimate of 28 cents.The company said it was putting in place a plan to cut costs, with a goal of $1 billion in savings by the end of fiscal 2022. Measures will including simplifying its product portfolio and supply chain as well as changing customer support, marketing efforts and real estate strategies, HPE said in the statement.“It definitely was a tough quarter by every measure and I’m disappointed in the performance, but I don’t see this as an indication of our capabilities,” Chief Executive Officer Antonio Neri said in an interview. “This was clearly driven by supply chain disruptions because of coronavirus,” including a shortage of chip components from China, disrupted logistics and social-distancing guidelines in some regions.Neri said he expected HPE’s sales to “recover sequentially,” with the third quarter posting better results than the second and the fourth improving further. Still, he said, it’s unknown just how bad the economic downturn will be.HPE withdrew its annual profit forecast last month, citing uncertainty from the Covid-19 pandemic, which has forced millions of people to stay home to prevent the spread of the virus.Neri has struggled to spark sales growth at the computing and networking company, which has seen year-over-year revenue decline in all but one quarter since the company split from HP Inc. in 2015. Competing with larger hardware rival Dell Technologies Inc. and dominant cloud-computing companies such as Amazon.com Inc. and Microsoft Corp., HPE has hitched its future to edge computing, which distributes data-processing capacity closer to customers rather than at centralized data centers. More immediately, the company has sought to support sales by offering $2 billion of financing for clients trying to preserve cash in the pandemic.Under the company’s plan to reduce expenses, senior executives including Neri will take 20% to 25% cuts to their base salaries and the board reduced each director’s cash retainer by 25% from July to the end of the fiscal year. The hardware maker will consolidate offices where possible, Neri said. He expects more than half of HPE’s employees won’t return to the office full time, instead dropping in for meetings and collaboration when necessary.The number of employees who may lose their jobs under the cost-cutting plan is undetermined, Neri said. The company will spend the next few months working out the details and evaluating how much it can save in other areas.In the fiscal second quarter, HPE reported falling revenue in all of its business segments. Server sales dropped 20% to $2.64 billion and storage hardware declined 18%. Neri said the company saw “steady” demand from large enterprises while small and mid-sized businesses struggled. HPE wasn’t able to produce as much data-center hardware as clients were ordering, he said.HPE’s shares dropped about 5% in extended trading after closing at $10.36 in New York. The stock has dropped 35% this year.(Updates with comments from CEO in the fourth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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(Bloomberg) — It’s been three weeks since President Donald Trump’s executive order to keep meat plants running in the pandemic and the government began preparing fresh guidance on how to keep their employees safe. Infections are still on the rise as workers say they’re being forced to put themselves in harm’s way in the name of food security.Based on 13 interviews with employees, labor representatives and a U.S. government inspector at meat plants in states including Arkansas, Virginia, Nebraska, North Carolina and Texas, employees are still standing elbow-to-elbow along production lines. There are some plastic barriers, but employees haven’t been spaced out in parts of the plants. People with symptoms are still coming in for shifts, afraid of losing income if they call in sick. Protective gear in some cases is of low quality — thin masks are breaking. With not enough distance between people, the combination could be ripe for the spread of disease.Companies have taken measures such as increasing hand-washing stations, distributing face shields, doing temperature checks and staggering breaks. But experts warn that in the end, nothing can make up for a lack of physical distance. And some are starting to question whether it’s even possible to run these plants safely during the pandemic, given the nature of how production is handled.“They’re still working shoulder to shoulder, and these partitions are not even proven to prevent the spread of the virus,” said Magaly Licolli, executive director at Springdale, Arkansas-based Venceremos, an organization focused on human rights of poultry workers. Companies have “basically refused to restructure workstations, since that would decrease production. But that’s what they need to do to prevent an outbreak.”Some of America’s largest meat suppliers, JBS SA, Tyson Foods Inc., Smithfield Foods Inc. and Cargill Inc., reopened plants recently, working to increase meat output after closures sparked some shortages and higher prices. That means maintaining high speeds on processing lines — something that makes physical distancing nearly impossible. Even protocols developed jointly by the U.S. Centers for Disease Control and Prevention and the Occupational Safety and Health Administration seem to acknowledge this. The guidance recommends reconfiguring work spaces to allow for 6 feet of distancing “if feasible,” but sets no hard rules.More than a dozen major meatpacking facilities reopened in May after Trump’s order. Since then, the coronavirus has continued to spread at almost twice the national rate in counties that are home to these types of plants. In the two months since infections started among meat workers, at least 30 have died and more than 10,000 have been infected, according to the United Food & Commercial Workers International Union. Virus rates among workers have topped 50% at some plants.The outbreaks have exposed vulnerabilities in the meat supply chain — and the human cost of keeping Americans fed amid a pandemic. Restaurants including Wendy’s Co. have reported meat shortages. But wholesale beef and pork prices, which had doubled since early April, are starting to ease as plants reopen.Meat-industry advocates have said that high infection rates are partly due to aggressive testing of their workers.The North American Meat Institute, the trade association that represents processors, says “that companies are constantly looking for and implementing new ways to protect workers under the careful oversight of state and local authorities” including the U.S. Department of Agriculture, the CDC and OSHA.“The safety of the men and women who work in their facilities is the first priority for the meat and poultry industry,” Sarah Little, a spokeswoman for the group, said by email.Still, Trump’s order sparked outrage from union leaders and worker advocates who argue that maintaining and ramping up production in spite of the outbreaks will lead to more illness.“Many aren’t coming to work — they’re sick or afraid. And if they do go in, they have to work faster” to make up for absenteeism since line speeds haven’t slowed, Licolli said.Interviews with employees from JBS, Tyson, Smithfield and Cargill, along with labor leaders, show that social distancing is difficult to maintain — both on production lines and in other areas. Even when traffic is directed, it can still get crowded. Some plant workers said colleagues have come into work coughing, sneezing and, in a few cases, vomiting.“We are doing everything we can to keep this virus out of our facilities,” JBS USA said in an emailed statement. “That said, our plants were not designed to stop the spread of a virus. Throughout this process, we have had to fundamentally alter the way we do business because of Covid-19.”JBS said it doesn’t want “sick team members coming to work,” and that “no one is punished for being absent for health reasons.” If an employee “is fearful of coming to work they can call the company and inform us, and they will receive unpaid leave without any consequence to their employment,” the company said.Some SlowdownsSome of the line speeds at JBS have slowed because members of vulnerable populations are being asked to stay home, with pay. Employees are required to wear a mask on company property, everyone is given a face shield and the company said it has hired hundreds of people for a team that oversee its efforts to keep employees healthy.Cargill said it is “consulting health experts and implementing new protocols as they are identified” to protect employees.“Standards are evolving as this virus progresses, and we are continuously learning about new ways to protect employees,” the company said in an emailed statement. “We are proactively putting into place the latest available safety protocols appropriate for the contexts in which we operate. We care deeply about our co-workers and the communities where we live and work.”“We take seriously our responsibility to feed the world,” Cargill said.Smithfield said it has taken “aggressive measures to protect the health and safety of our employees during this pandemic.”On its website, Smithfield lists safeguards taken including boosting use of protective gear to include masks and face shields, making free voluntary Covid-19 testing available to employees, explicitly instructing employees not to report to work if they are sick or exhibiting symptoms and increasing social distancing, wherever possible.Tyson said it has implemented a range of social distancing measures, including installing physical barriers between workstations and in break rooms, providing more breakroom space, erecting outdoor tents where possible for additional space for breaks, among other steps.“We only want people to come to work if they’re healthy,” Tyson said in an emailed statement. “Our top priority is the health and safety of our team members, their families and our communities.”The company said it’s addressing line speed on a case-by-case basis, and has slowed lines in some locations based on labor availability and to allow for social distancing. It’s also staggering start times to avoid large gatherings and has designated social-distance monitors stationed throughout each facility. Tyson said the measures being taken are based on guidance from CDC, OSHA and local health officials.Many employees acknowledge that companies are making some improvements, but they point to line speeds as part of the underlying problem for distancing.There are a lot of areas where workers are complaining they’re “right on top of each other,” said Kim Cordova, president of United Food & Commercial Workers Local 7 union, which represents workers at a JBS USA plant in Greeley, Colorado.Data from the USDA on slaughterhouse production underscore the rapid increase in output in the past few weeks. As of May 18, government estimates for daily hog slaughter rose 6.2% from a week earlier, and the cattle kill was up 9.3%. Capacity is back to about 80% of normal, after falling to roughly 60% to 70% last month.To allow for proper social distancing, production should be running at a much lower rate, possibly just one third of normal, according to Sanchoy Das, a professor at the New Jersey Institute of Technology, where his research focuses primarily on supply chain modeling and analysis.Instead of slowing things down, some companies have been adding weekend shifts to further boost production.“Usually we don’t work Saturdays until the middle of August. Right now, because of coronavirus, we will work from now up until the end of February 2021” to meet rising demand, said Dennis Medbourn, a union steward at the Tyson pork plant in Logansport, Indiana, where he’s worked for 12 years.Tyson said it has “historically worked Saturday shifts through April and May at the Logansport facility,” adding “this isn’t a new initiative.”The national UFCW union has also pointed to a lack of rapid testing as part of the challenges facing producers.Protective GearAnd there are issues with protective gear.In some places, plastic sheeting is used to create barriers between workers. That ends up creating a capsule where cleaning chemicals become trapped next to people’s faces, making it difficult to breathe, according to Licolli of Venceremos.Joe Enriquez Henry, president of the League of United Latin American Citizens in Iowa, said the combination of fast line speeds while wearing protective gear also creates breathing problems, likening it to jogging while wearing full head gear.Face shields become impractical because of the nature of the job: Inevitably, blood splatters on shields — forcing employees to then wipe them off in order to see properly, potentially exposing them to whatever particles had gathered.“These plants are what I would describe as wet plants, for the people who work there, there’s fluid flying everywhere,” said Das of the New Jersey Institute of Technology. “Everybody is wet, the floor is wet, so it is a conducive environment for disease transmission.”In the early days of the pandemic, there was little information about how workers should defend themselves against the virus. The CDC didn’t issue guidance for “critical infrastructure” workers, including food industry staff, until April 3. There was pandemic guidance on file from OSHA, written in 2009 as a result of the H1N1 influenza pandemic, but it wasn’t widely distributed this time around. OSHA and the CDC didn’t issue Covid-19 specific guidance for meat and poultry workers until late April, after more than a dozen industry employees had died from the virus. The guidance was last reviewed May 12, according to the CDC website.Wiggle RoomEven now, unions say federal guidelines aren’t strong enough. The language is full of phrases like “if possible” and “if feasible,” allowing for plenty of wiggle room.The “USDA works with plant owners to keep them operating safely in accordance with CDC and OSHA guidance. State and local health departments are heavily involved,” the CDC said in an emailed statement to Bloomberg.“It’s important to remember that CDC is a non-regulatory agency, and its recommendations are discretionary and not mandated,” the agency said. “However, guidance and recommendations issued by CDC are often used by other agencies responsible for developing and enforcing workplace safety and health regulations.”OSHA didn’t respond to emails seeking comment.“These recommendations, they have no enforceable piece to them and that’s the real challenge,” said Jake Bailey, packing house and food processing director for UFCW 1473 in Milwaukee.Bailey has toured many of the 20 food and meat processing plants the union represents in recent weeks. It’s not all bad news, he points out. In some facilities, things have changed “drastically” — there is duct tape on the ground telling people where to stand as they get their temperature taken, and every 5 to 15 feet there’s a sanitizing station. Workers have been moved apart, but there are a few places where the distance has actually reached the recommended 6-foot threshold, he said, adding that that’s where companies are trying to put barriers in place.“Physical distancing is the number one way we currently know to prevent transmission,” said Celeste Monforton, a lecturer in public health at Texas State University. “You can put out as much hand sanitizer as you want, as many checkpoints for temperatures, all of those things are complementary, but extremely limited in terms of preventing transmission of disease compared to physical distancing.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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