Hewlett Packard Enterprise (HPE) isn’t done acquiring, CEO Meg Whitman says, but it appears the company isn’t done cutting either.
Separately from the spinoff-merger deal with Micro Focus, Whitman noted on yesterday’s earnings call that HPE has undergone some touch-up layoffs as it enters what appears to be its final round of divesting businesses.
“Rightsizing of corporate functions” is how Whitman phrased it, adding that the company has also simplified some of its businesses. She didn’t mention any specific numbers of job cuts.
It’s worth noting that in 2015, HPE anticipated layoffs of up to 30,000 to be spread across three years, so any incremental staff cuts could arguably be part of the plan. (HPE did not immediately respond to a request for more information.)
“We have got to have the overhead of a $28 billion company,” Whitman said, referring to the company’s expected annual revenue after all the spinoffs are done. “When we started, we had the corporate overhead of a $110 billion company, then a $50 billion company, and now a $28 billion company.”
This does not appear to be an effort to reduce headcount for its own sake; in fact, headcount might soon go up. The company is still in the process of acquiring SGI, the 1,100-employee big data operation (and descendent of Silicon Graphics Inc.), for $275 million.
In other overhead-related moves, the company consolidated the marketing functions of all its business units and placed all its sales teams under one leader, Whitman said.
She also noted that HPE Labs is now part of the Enterprise Group, the largest of the company’s surviving segments and the one that includes servers, storage, and networking.
Slimming Down to $28B
HPE has spent its first year shedding large portions of its business, including the Software segment that included the infamous $10.3 billion acquisition of Autonomy. HPE announced yesterday that it’s spinning off non-core software assets, Autonomy included, in an $8.8 billion deal that will merge that business with Micro Focus. HPE shareholders would own 50.1 percent of the merged entity.
What will be left will be a company with expected annual revenues of about $28 billion and a focus on what HPE calls hybrid IT. That includes traditional data centers — which make up 85 percent of IT spending, CEO Meg Whitman said on the earnings call — as well as software-defined infrastructure and cloud platforms.
The company has to fill some gaps to complete that picture, though. “Look for more ROI-based, smart acquisitions like Aruba, like SGI,” Whitman said.
Dell & Cisco
The IT infrastructure market seems poised for a battle royale among Cisco, Dell, and HPE. Prodded by analysts, Whitman took a few shots at the other two.
Dell is getting bigger and “doubling down on old technology” while HPE is working on becoming a smaller, faster entity, Whitman said. She also claimed that Dell is “levering up,” packing on more debt. “It is difficult to be levered as much as Dell is in this environment,” she said.
Cisco, meanwhile, still doesn’t own the storage component of the compute-network-storage triumvirate. That could be a handicap “as the environment converges and we look at hyperconvergence and Synergy [HPE’s composable infrastructure],” Whitman said.