HP sacks China division chairman as networking revenues drop

For the first quarter of 2015, HP reported a decline in revenue of 5% to $26.8bn compared to the same period the year before

For the first quarter of 2015, HP reported a decline in revenue of 5% to $26.8bn, compared with the same period the year before.

HP's networking division reported a 16% decline in net earnings compared with 2014, while its Business Critical Systems division dropped 13%.

Gross revenue in its Personal Systems group remained static at $8.5bn, while Enterprise Systems’ revenue declined by $500m to $5bn, compared with $5.6bn in the first quarter of 2014.

Gross revenue in its Enterprise Group was static at $7bn.

In a transcript of the earnings call posted on the Seeking Alpha financial site, HP CEO Meg Whitman described the performance in the networking business as disappointing. She said: "We had execution issues in the US and in China, which we are working to address. 

"We made leadership changes in China in the quarter, which we believe will strengthen our ability to compete effectively in what remains a tough market. And in the US we are re-aligning sales incentives to increase focus."

Growth in converged storage division

However, she added: "We continue to see positive momentum in our datacentre and switching business which grew for the fifth consecutive quarter. And while we had execution issues in the US and China, we delivered solid revenue growth in the rest of the world."

She said the converged storage business grew 21%. "3PAR, plus XP, plus EVA was up 12% year-over-year, all flash 3PAR revenue accelerated now making up 20% of total 3PAR mid-range portfolio," Whitman said.

While the company benefited in 2014 from Microsoft ending support for Windows XP, Whitman said HP had not seen an uptake in x86 servers to refresh aging Windows 2003 servers, when support ends on 14 July 2015. 

"In terms of the kind of Windows 2003 refresh, it’s starting, but it is not a material impact at this point. It’s really just beginning, we do expect that will ramp as we go through fiscal 2015, but it was not a major factor at all in the performance that we delivered in industry standard servers this quarter," Whitman said.

However, she said HP was confident it would see a boost in its Enterprise server business: "The combination of Gen9 and the refresh cycle makes us fairly bullish on industry standard servers kind of throughout the rest of 2015."

As Computer Weekly previously reported, Deutsche Bank has signed a 10-year deal with HP to re-engineer the IT that underpins its wholesale banking arm, in preparation for the next phase of its digital transformation. Whitman said: "With this partnership, HP will help Deutsche Bank meet its long-term business objectives through a transformation of its IT infrastructure, including a customised HP Helion solution that will enable them to focus on creating and delivering new services for their clients."

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