Four takeaways from HPE's Q3 results
We rounded up the most important information from HPE's quarterly numbers
Hewlett Packard Enterprise saw its revenues rise four per cent year on year in its Q3, taking sales up to $7.8bn (£6bn).
Operating margin for this period, ending 31 July 2018, rose 3.9 percentage points from 2.7 per cent to 6.6 per cent, largely driven by the vendor's cost-saving initiative.
We've rounded up the key points from HPE's Q3 results.
HPE Next remains on course
HPE Next, the code name for HPE's mammoth cost-cutting strategy, is on track to meet its objectives, according to CEO Antonio Neri.
The plan was put in place by previous chief executive Meg Whitman so the vendor could save $1.5bn over a three-year period, and will reportedly see 10 per cent of the firm's workforce cut.
Neri said this cost cutting is being mixed with an increased move towards higher-growth markets.
"Our focus on shifting our mix to higher-value growth areas while optimising our volume business is working," he said on a conference call transcribed by Seeking Alpha.
"This is supported by excellent execution of HPE Next, our initiative to re-architect the company from the ground up with the goal of driving better operational efficiency and effectiveness.
"Even as we focus on new growth areas, we continue to deliver solid performance across each of our business segments. This, combined with the market momentum, will enable us to deliver fiscal year 18 revenue and earnings well above our original outlook provided at a securities analyst meeting last year."
HPE is almost free of tier-one burden
The tier-one server business that has plagued HPE over recent quarters remains an issue, but one that Neri hopes will be put to bed soon.
HPE's tier-one business sees it provide low-margin commodity servers, which put a dent in the vendor's margins.
With this tier-one business out of the equation, HPE saw its hybrid IT revenue rise five per cent year on year (compared with three per cent with the business included).
Sales in the server business, meanwhile, rose 10 per cent with the business excluded, compared with five per cent with it included.
Neri said: "We expect to continue to grow the [server] business, despite the fact that we continue to de-emphasise our focus on that commoditised server business.
"This is because the demand is obviously there and ultimately the strategic growth categories continue to grow at a healthy pace, and we continue to gain share in this particular segment."
Driving force of de-merger departs HPE
On the earnings call Neri announced that HPE's CFO Tim Stonesifer is stepping down from his role at the end of the current fiscal year.
Neri said Stonesifer had played a "significant role in turning HP around and contributing to the largest operation in corporate history as we launched Hewlett Packard Enterprise".
"He has helped us de-merge two major businesses, which deliver more than $20bn of transaction value and has overseen the completion of 11 acquisitions," Neri added.
Stonesifer will be replaced by Tarek Robbiati, who was most recently CFO at Sprint.
Storage and hyperconverged optimism
HPE saw its storage revenue climb one per cent year on year, as a result of what were "tougher second-half compares", according to Stonesifer.
However the CFO expects the storage unit to improve in Q4, driven by an influx of storage sales specialists hired earlier in the year.
This most recent quarter saw "high double-digit growth" in the big data segment, while entry-level growth was solid.
Neri added: "When you look with the combination of that [storage] segment plus the other platforms, including hyper-converged and composable [infrastructure], actually total growth is 12 per cent.
"Within that also, we saw a big base of storage growing 70 per cent, because that's the demand. So we see the explosion of data continue and you have to store the data somewhere."