Quarterly results from the latest report on Hewlett-Packard Enterprise didn't impress investors. On the news of its revenues falling short of estimates—what's called a "miss" in today's markets—the stock got sold down 7 percent a share. Stock prices come and go, and HPE has made a better restart than the HPQ end of the split-up HP. The future, though, is certain to be getting slimmer for HPE. The question is whether something smaller can ever grow like the monolithic HP which carried 3000 customers across more than three decades.
It's easy to dismiss the fortunes of a split-off part of a vendor which doesn't make 3000s anymore. When the plans wrap up on a pair of "spin-mergers" of two of the company's bigger business units, what's left over might have lost any further ability to change the enterprise computing game. Migrating 3000 customers will still have to take their computing someplace. Looking at the HPE prospects for 2017 is a part of that decision.
Analyst Bert Hochfeld has just written a 4,000-word report on the company on the Seeking Alpha website. That's a huge piece of business reporting that deserves a close read if you're buying stock or working for HPE. IT managers can find some insights as well. Cherry-picking some sections, to look at HPE's business futures, is useful for planning. HP's selling off its Enterprise Services and Software businesses to CSC and Micro Focus, respectively. The deals will wrap up by September. Hochfeld says what remains at HPE is unlikely to grow. A lack of growth is what drove down HP's stock last week.
"I do not think anyone imagines that what will remain of HPE in the wake of its divestitures is a growth business," Hochfeld said. "There are some growth components in otherwise stagnant spaces. The company has yet to demonstrate that it can execute at the speed necessary to exploit the opportunities it has—and to make the right choices in terms of allocating its resources in what are difficult markets."
In a report titled Has the company done a u-turn on a trip to nowhere? Hochfeld notes that what's left over at HPE this year might be viewed like the picture of Dorian Grey. But that would only be true, he adds, in a world where datacenters will only be run by cloud providers. Companies will run their own datacenters, a fact HP will need to stress to stay relevant when it displays a smaller profile.