HP Inc is still outshining HPE
HPE saw revenues climb by a modest one per cent to $7.8bn (£5.87bn), when adjusted for currencies and divestments, during the fourth quarter. The bulk of its business, its Enterprise Group segment which contains all server, storage and networking sales, saw revenue dip by two per cent to $6.9bn.
Yet the other half of the divorced firm, HP Inc, enjoyed double-digit growth at 11 per cent, amounting revenues of $13.9bn for the quarter.
While HPE's server unit took a substantial hit, with revenues declining by five per cent year on year. Networking meanwhile surged by 21 per cent during the quarter, with storage revenues increasing by five per cent. Its Enterprise Group on the whole posted $723m in operating profits for the quarter, while its Financial Services arm produced $78m, up from $70m in the previous year.
HP Inc's PC business meanwhile saw double digit growth in sales at 13 per cent to $9.1bn, while its printing business hit net revenues of $4.9bn, up seven per cent year on year. Yet profits were down on a year-on-year basis, with PCs falling by $3m to $343m, dragging down total earnings by 16 per cent to $848m. Printing however saw an uptick in profits by 26 per cent to $807m.
HPE made a loss after incurring 'Transformational costs'
HPE posted non-GAAP net earnings of $473m, up from $389m posted in the same quarter last year. But taking into account "transformational costs", stemming from the firm's HPE Next initiative, a plan to save $1.5bn over the next three years. The initiative will see the vendor pull its direct presence from some low-performing countries, and has already seen the firm commit to removing the EMEA level of its business.
Such efforts, however, have put a $328m strain on its bottom line, with a further $202m being ploughed into "separation costs". As a result, HPE made a GAAP loss of $224m, down from $576m profit reported in Q4 of 2016.
Commenting on its restructure on a call transcribed by Seeking Alpha, CEO Meg Whitman said: "We dismantled the regional overhead structure, we refocused our sales force, we put more specialists in the field and we saw no impact to frontline sales from those changes that we made in Q4. So that gives us confidence. And they started on 1 November, firing on all cylinders with the new organisation and with a couple of months under their belt. So we feel pretty good about that."
But Nimble is saving HPE's storage business
Whitman said the vendor's acquisition of Nimble announced earlier this year caused storage revenues to bounce back, growing by five per cent year on year. She claimed that Nimble's sales were up by 80 per cent, contributing to an overall 16 per cent increase in flash array sales. Whitman said there are further plans to integrate Nimble's sales team to continue driving growth in its storage business.
"We are taking action. We are combining the Nimble and 3PAR storage sales teams which is going to give us more critical mass there and that's going to be led by Keegan Riley, who led sales at Nimble. And we are also going to aggressively add some more specialists to the field," she said.
HP is tightening its hold on the PC market
HP attributes its 13 per cent year-on-year growth in its Personal Systems business to an uptick in notebook sales, which leapt by 16 per cent year over year, while desktops saw a healthy 10 per cent growth. The firm also sold six per cent more PC units than the same period last year.
HP's performance goes against the grain of a PC market that has been continuously described as doomed by market watchers. But HP claims that it has tightened its hold on the market, increasing its share by 1.2 percentage points to 22.5 per cent globally.
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