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February 21, 2018

HP's Enterprise reports a rising Q1 tide

HPE Hybrid IT Q1 2017
Source: HPE reports. Click for details.

As her parting gift to incoming CEO Antonio Neri, HP Enterprise leader Meg Whitman left him with one of the best quarters HPE has posted in years. While the company that makes systems to replace the HP 3000 posted 34 cents a share in profits, its revenue from server sales rose by 11 percent, along with gains in storage revenues (up 24 percent) and datacenter networking gear (up 27 percent).

The increase in server sales has been a difficult number to deliver ever since HP stopped supporting the HP 3000. The gains came in the computer lines driven by Intel's chips, not HP's Itanium processors.

An analyst at Moor Insights and Strategy was quoted in the Bay Area's Mercury News as saying "If this is what HPE will look like under new CEO Antonio Neri, investors, customers, partners and employees will be pleased.”

The results came from the final quarter of Whitman's leadership, though. The company is raising its quarterly dividends to almost 12 cents a share, a 50 percent increase, to return money to shareholders. HPE will be buying back its stock throughout 2018 as well. The stock price rose to $18.35 on the report, which beat analysts' estimates of 22 cents a share in profits and $7.1 billion in revenue. HPE's Q1 2018 revenues were $7.7 billion.

Industry Standard Servers—the type of computer system that can drive the Stromasys Charon virtualized MPE/iX environment—came in for specific mention in HP's conference call with analysts. ISS contributed to the overall growth in servers, according to Neri. 

He also commented on the change in US tax laws benefiting HPE ("we have more flexibility in using our overseas cash") and then explained how his HPE Next is going to shift the culture of the corporation that was once ruled by the HP Way.

Neri, the first career-long HP employee to become CEO since Lew Platt in 1993, architected and initiated HPE Next. "It's all about simplification, innovation and execution," he said in a Q&A session with analysts. "I'm pleased with the first quarter performance where we executed well with no disruption. This is an opportunity for me as the new CEO to establish a new culture as we transform the company, and to really architect the company from the grounds up with a clean sheet approach. And this is going to change the culture of the company."

What I learned is the fact that you can push more, you can do more. And the organization is actually very excited about what we’re doing, because this is an opportunity to improve the way serve our customers. So it is very critical initiative for us and we are confident we’re going to deliver not only the improvements in our cost savings but also the way we work and employee productivity. And most importantly that should reflect in our business performance and our customer satisfaction.

Neri said HPE will also be re-investing at a higher level in employee 401k accounts, and assisting in more degreed education "so employees can fulfill their visions in our company as they progress in their careers."

Neri started at HP working in a call center for customer support during the 1990s. Whitman remains on HPE's board of directors after retiring from the corporation's CEO job.

06:46 PM in Homesteading, News Outta HP | Permalink

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