Declining sales in key business divisions don’t bode well for HPE post-split
Hewlett Packard Enterprise (HPE) appears to be struggling to find its footing after the HP split, having reported declining revenues in its latest financial results.
HPE’s first quarter fiscal results for 2017 revealed a 10 percent decline in revenues compared to the same quarter last year, with declining revenues in important divisions causing the company some bother.
HPE fiscal flop
The Enterprise Group, a strategically important division for HPE, as a 12 percent decline in revenues, contributing $6.3 billion (£5bn) to the pot, while its server revenues dropped by 12 percent, its storage sales slumped by 13 percent and its networking services saw a step fall in revenue of 33 percent.
Given cloud is a focus area for HPE, the company can breath easy knowing its software-as-a-service arm saw an increase of four percent in revenue, but this did little to mitigate the voer all poor performance of its Software division which saw revenues fall by eight percent to bring in $721 million (£574). Many other divisions under the HPE banner also saw significant drops in quarterly revenues.
HPE did see a decent dollop of growth in its high-performance computing division, which rose by 30 percent.
Overall, HPE still turned a profit of $267 million (£212m), but that’s hardly a stellar amount for a company of its size.
The firm looks to be trying to mitigate some of its division losses by streamlining the company with cost cuts, such as relocating staff to nations where costs are lower and cutting future pension outgoings.
Chief executive Meg Whitman appears to be positive in the face of declining divisional revenues: “I believe HPE remains on the right track.”
“The steps we’re taking to strengthen our portfolio, streamline our organization, and build the right leadership team, are setting us up to win long into the future,” she said.
The stock market dis not feel as positive, with HPE’s share prices having taken a tumble of approximately six percent in after-hours trading, seeing them now valued at $23.15 (£18.45) per share.
With buoyant growth in the cloud being enjoyed by the likes of AWS, it it likely HPE will continue to push is business into the arena and get involved in providing the systems for companies to carry out digital transformation doctrines.