(Reuters) -Hewlett Packard Enterprise said on Thursday it would lay off 5% of its workforce, or over 2,500 employees globally, as part of a cost-saving program and forecast its second-quarter revenue below Wall Street estimates, triggering a 16.5% drop in shares during aftermarket trading.

The program is expected to be implemented through the fiscal year 2026 and aims to deliver gross savings of about $350 million by fiscal 2027, the company said. The company had nearly 61,000 employees as of October 31, 2024.

HPE said it expects cash charges of nearly $350 million over the next two years tied to the cost-saving program, with $250 million to be incurred in fiscal 2025 and the balance in 2026.

HPE’s plan to eliminate jobs “will probably have ripple effects throughout the industry and shake the confidence of employees and managers at other tech firms,” said Michael Ashley Schulman, chief investment officer at Running Point Capital.

The server maker projects revenue to be between $7.2 billion and $7.6 billion for the second quarter, while analysts expect $7.93 billion, according to data compiled by LSEG.

Enterprise customer spending has remained weak due to cost optimization efforts in the wake of economic uncertainty and high interest rates, hitting companies such as HPE.

HPE is also grappling with intensifying competition from rival server makers, including Dell Technologies and Super Micro Computer.

(Reporting by Juby Babu in Mexico City; Editing by Mohammed Safi Shamsi)