Hewlett Packard Enterprise (HPE) saw its revenue drop 10 per cent in Q1, partly as a result of a tier-one service provider "dramatically" cutting its business with the vendor - according to CEO Meg Whitman.
For the three months ending 31 January 2017 HPE reported revenue of $11.4bn, down from $12.7bn in the same period of 2016.
When the figures are broken down HPE's Enterprise Group saw a 12 per cent revenue drop to $6.3bn; the Enterprise Services (ES) arm saw an 11 per cent drop to $4bn; and software revenue was down eight per cent to $721m.
The Financial Services division of the business however saw revenue jump six per cent to $823m.
Service provider cuts business
Whitman alluded to the mystery tier-one service provider numerous times on the earning call, a transcript of which can be found on Seeking Alpha, saying it impacted the vendor's server and storage revenue.
Whitman said that she in confident HPE can return to growth, but warned that the impact of the downturn in business with the service provider could make that difficult.
"I think we can return to growth but there is one caveat that I would make and that is a single tier-one service provider, who was a big customer of ours, slowing down orders dramatically," she said.
"But for the rest of the business, ex that large single tier-one service provider, I think we've set ourselves up well to be prepared to tackle the future."
Whitman was asked a number of times to expand on the service provider by participants on the call, but remained coy on the topic.
She did say, however, that it had "dramatically decreased their purchasing below commitments that they had made" to HPE.
Changes at the top
Whitman also explained that changes to top-level management at HPE had more of an effect on business through Q1 than HPE should have allowed, with a new global sales boss coming in, as well as new sales bosses in each geographical area.
"Frankly, as we headed into Q1, we overloaded many of our top people and disrupted the day-to-day cadence of our business more than we should have," she explained.
"The good news is that we've identified the problem and are fixing it. More importantly, once the dust settles, the changes we've made will leave HPE in a much better position to compete and win."
Speaking in more detail about the channel, Whitman said that the vendor has taken advantage of the disruption caused by Dell's EMC acquisition and has snapped up some partners as a result of this.
"I think we actually did quite a good job of intercepting that merger," she said. "We've recruited a lot of new channel partners [and] they're beginning to ramp.
"So, I think we've taken advantage of that to some degree. Lenovo is around - they've got their hands full on a couple of other things, the server business and Motorola - but, Dell is being very aggressive, particularly in the server side of things and we're countering that."
New channel boss
HPE appointed Denzil Samuels as its new channel boss in January, which Whitman explained was a result of the previous occupant Kerry Bailey focusing too heavily on cloud.
"We had a fellow who was hired in a number of years ago, who actually did a very good job for us, but was really focused on selling cloud services," she said.
"And so we actually hired a fellow by the name of Denzil Samuels, who has a long history with the channel.
"We're making improvements in the channel with some process reengineering and focusing more on SMBs through distributors and value-added resellers."
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