Hewlett Packard Enterprise’s sluggish server sales and CEO Meg Whitman’s announcement that she will leave the company early next year overshadowed HPE’s slightly better-than-expected financial results reported yesterday.
The company’s revenue hit $7.7 billion in the fourth quarter of fiscal 2017, up 5 percent from a year ago.
Server revenue was down 5 percent compared to last year, largely due to HPE’s declining sales to cloud giants. Excluding these Tier 1 service provider sales, however, server revenue grew 6 percent. The company last month said it would stop selling commodity servers to hyper-scale cloud companies.
But on the earnings call yesterday, HPE CFO Tim Stonesifer said he doesn’t expect the server business — which will now focus on selling high-end servers and products like its SimpliVity hyperconverged and Synergy composable infrastructure — to get back to growth until late 2019 or early 2020.
HPE’s storage revenue was up 5 percent in the quarter, with all-flash arrays growing 16 percent and the company’s Nimble Storage products up more than 80 percent. But when it came to the company’s 3PAR storage line, which also includes all-flash arrays, “performance was soft,” Whitman said.
“InfoSight will help as we roll that across the 3PAR portfolio,” said Stonesifer. HPE yesterday said it will extend InfoSight — the predictive-analytics technology that it acquired from Nimble Storage, which it bought for $1 billion earlier this year — across its 3PAR product line.
“We’re combining Nimble and 3PAR sales teams, which will give us more critical mass there, and adding more specialists to the field,” Whitman added.
Another way HPE aims to drive growth and profitability is through HPE Next, the company’s plan to save $1.5 billion over the next three years.
“In Q4, we moved into the execution phase of HPE Next, our program to redesign the company to be purpose-built for today’s and tomorrow’s competitive environment,”said Whitman, according to a Seeking Alpha transcript. “HPE Next is all about simplifying the way we work, driving execution, and investing in innovations that will differentiate our solutions in the years ahead.”
It also includes layoffs, which started in October.
Neither Whitman nor Stonesifer provided any specifics about upcoming layoffs on the earnings call. Stonesifer did say the program is driving cost savings.
“If you look at HPE Next, that $250 million of net savings, we are on track to do that now,” he said. “I will say that roughly two-thirds of that is in the back half of the year.”
HPE President Antonio Neri, who will take the reins from Whitman in Februrary 2018, will continue spearheading the company’s Next strategy.
“The strategy will remain entirely consistent,” Whitman said. “It was crafted by Antonio and I. He has been leading HPE Next. And we are completely aligned on the strategy, as is the sales team, as is the entire organization. And by the way, it’s working. So, you can expect entirely consistent strategy from Antonio.”