Share price falls on lower sales Hewlett Packard Enterprise Q4 revenues were broadly lower and shares slipped as a result. Its revenue of $12.5bn was down -7% yr/yr, while, cash flow from operations rose 44% to $2.2bn. The Enterprise Group was down -9% yr/yr to $6.7bn, Enterprise Services -6% yr/yr to $4.7bn, Software $903m (-6% yr/yr), Financial Services $814m (+2% yr/yr). Servers revenue was down 7%, down 6% when adjusted for divestitures and currency, Storage revenue was down 5%, down 3% when adjusted for divestitures and currency, Networking revenue was down 34%, flat when adjusted for divestitures and currency, and Technology Services revenue was down 4%.
CEO Meg Whitman: "FY16 was a historic year for Hewlett Packard Enterprise. During our first year as a standalone company, HPE delivered the business performance we promised, fulfilled our commitment to introduce groundbreaking innovation, and began to transform the company through strategic changes designed to enable even better financial performance."
Tim Stonesifer, EVP and Chief Financial Officer : “From a macro perspective, we saw continued revenue softness in Europe, particularly in ES, due to a persistent slowing in the UK public sector business.”
Globally, he says, software revenue was flat, as strength and security was offset by declines in IT management and big data. “We have stabilised license revenue, which was only down 1%, as compared to down 18% in Q3. Also encouragingly, the renewal rate for high-margin support contracts improved 3 points year-over-year to over 90%. SaaS had another record quarter with a 11% revenue growth. The team also continue to focus on disciplined cost controls, and as a result, the operating margin improved 220 basis points to 32.1%.”
CEO Whitman: “We need to shore up core ISS rack with improvements in the channel, improvements in quote to cash, and focus – more focused on the distributors and VARs for the volume-related ISS rack business. So distributors and VARs like our newly redone value-added reseller program and our ability to do quotes fast and our ability to fulfill faster than our competitors. So I would say that if we can shore up ISS rack then I’m confident in the growth rates of these other businesses that we’re now gaining real traction in. So there’s weakness in ISS rack. I think, we are not executing as well as we could and we aim to fix that.
On other issues, she says the US election did not affect IT spending at all in the US. “Actually, we saw a bigger impact of Brexit when the UK decided to leave European Union, because it actually froze purchasing quite broadly across Europe for a bit.”