HPE CEO Meg Whitman on challenging market conditions

HPE revenue in detailHewlett Packard Enterprise (HPE) said its revenue dropped 10 percent to $11.4 billion in its fiscal 2017 first quarter, ended January 31, 2017.

“The steps we’re taking to strengthen our portfolio, streamline our organization, and build the right leadership team, are setting us up to win long into the future,” said Meg Whitman, president and CEO of Hewlett Packard Enterprise.

The US-based enterprise networking company is reducing its FY17 outlook by $0.12 to continue making the appropriate investments to secure the long-term success of the business. HPE is facing challenges from foreign exchange movements, higher commodities pricing, and some near-term execution issues.

Hewlett Packard Enterprise in Q1

Hewlett Packard Enterprise generated revenue of $6.3 billion (–12 percent) from Enterprise Group with servers revenue dropping 12 percent and networking revenue dipping 33 percent.

HPE’s Enterprise Services revenue fell 11 percent to $4 billion with Infrastructure Technology Outsourcing revenue dropping 8 percent and Application and Business Services revenue falling 17 percent.

Software revenue of HPE fell 8 percent to $721 million.

Technology Business Review said the performance reflects HPE’s status as an incumbent vendor in a challenging market, with multiple internal and external challenges preventing top-line gains. HPE’s converged storage business – a large and mature piece of its overall storage business – experienced 12 percent revenue decline in, inhibiting the vendor’s ability to offset the impact of declining demand for legacy storage technologies.

“To drive revenue stabilization and customer engagement, HPE remains committed to its strategy of enabling hybrid IT, which is supporting customers use of in house and cloud-based environments,” said Stephanie Long, research analyst at TBR, in a research note.

HPE’s evolution remains in progress, as evidenced by its pending spin-merge transactions for non-core services and software assets with CSC and Micro Focus, as well as its pending acquisitions of hybrid cloud orchestration provider Cloud Cruiser and network security vendor Niara.

“In the face of strong competition and similar evolutions from Cisco, Dell Technologies and others, HPE faces a period of continued investment to ensure its long-term differentiation,” Stephanie Long said.

TBR said though SaaS grew 4 percent fuelled by products such as Fortify on Demand, HPE posted an overall software revenue decline of 8 percent, with license as well as support (maintenance) each declining 9 percent year-to-year as HPE decreased its emphasis on customer-facing applications.

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