HPE Reports Mixed Q2 Due To Hybrid Sales Decline

Hewlett Packard Enterprise (HPE) reported a mixed second quarter on Thursday due to a decline in its hybrid IT unit. The quarterly revenue for the group is down 4 percent to $5.6 billion, read more about HPE’s Q2 News at ZDNet.com.

Analyst Take:  HPE reported a mixed quarter, beating the streets from an earnings standpoint while actually coming up short on the revenue expectations. Perhaps the area for greater exploration is the continuation of revenue shortfalls in investment/growth areas including Pointnext services and Intelligent Edge. Given the strategic nature of these and other business units like Hybrid IT, CEO Antonio Neri’s comments around the elongated sales cycle makes sense. Frankly, I believe many businesses wind up pulling revenue forward to meet earnings; often at a cost to the bottom line of the business.

Overall, the profitability on revenue is encouraging, as the returns to shareholders is always a critical number to watch. However, going forward, I am eager to see if HPE can capitalize on their focus areas, as mentioned, including their service business, edge compute and hybrid IT. Aruba is another interesting area to watch. Their strong service revenue growth is encouraging, however, the sharp decline in revenue (8 percent), gives pause.

Lastly, the Cray acquisition will be something to keep an eye on. This acquisition will expand HPE’s footprint in high performance compute, and a quick integration into the business upon close will provide a bump in revenue and access to new customers outside of HPE’s current purview.

Futurum Research provides industry research and analysis. These columns are for educational purposes only and should not be considered in any way investment advice. 

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Daniel Newman

Daniel Newman is the Principal Analyst of Futurum Research and the CEO of Broadsuite Media Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise. From Big Data to IoT to Cloud Computing, Newman makes the connections between business, people and tech that are required for companies to benefit most from their technology projects, which leads to his ideas regularly being cited by CNBC, Barrons, Business Insider and hundreds of other sites across the world. A 7x Best-Selling Author including his most recent “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor. MBA and Graduate Adjunct Professor, Daniel Newman is a Chicago Native and his speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
Daniel Newman