Brexit sparks public sector slowdown and pricing scrutiny at HPE

Hewlett Packard Enterprise reveals that Brexit did have an impact and the CEO has a swipe at Dell as the latest results are issued

It might be a struggle to find evidence of a negative Brexit impact in the UK manufacturing and services sectors but it has caused a few headaches over at Hewlett Packard Enterprise.

The vendor revealed that there had been a slowdown in public sector spending following the referendum decision to exit the EU.

The mention of the activity in the public sector was made in the latest results announcement, which will be largely remembered for the decision to offload the software business in a spin merger with UK firm Micro Focus.

The HPE software business is merging with the British firm in a deal valued at $8.8bn and the third quarter 2016 earnings showed that revenue had dropped to $12.2bn, down 6% on the previous year.

Speaking to analysts HPE CEO Meg Whitman said that Brexit was something that it had felt in its order books in the UK and across the continent.

"What we saw was actually a pause in purchasing in the UK. Certainly the UK public sector, but also the UK and then more broadly Europe which was, this was unexpected, a big change, let's take a pause and decide what we want to do here," she said.

"What I will say is that in the last couple of weeks we're actually seeing orders pick up again," she added.

But the result of Brexit and the shock to the UK economic system, particularly the value of the pound, has led to ongoing price scrutiny.

"We continue to also monitor the pricing, competitive pricing environment that we see and we adjust as necessary particularly in the channel. So the channel is where we serve SMB and that's where our ability to sort of move the pricing in response to competition, we look at that actually every single week sometime multiple times a week," added Whitman.

Whitman also used the analyst conference call to have a swipe at Dell a day after the EMC deal was completed, hitting back at the idea that big is better.

"I think we should just contrast our strategy with Dell. So we are getting smaller, well they’re getting bigger. And this is important, because I believe speed and agility is critical in innovation and go-to-market," she said.

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