HP business units decline as company readies split

HP is two months away from splitting the company into HP Enterprises and HP Inc. The latest results reveal challenges ahead

All areas of Hewlett-Packard’s (HP’s) business, apart from its enterprise group, declined in their third quarter (Q3) 2015 results, the company stated.

Personal systems revenue was down 13% year-over-year; printing revenue was down 9% year-over-year; Enterprise services revenue was down 11% year-over-year and software revenue was down 6%.

Its Enterprise Group increased revenue by 2% year over year thanks in part to 22% growth in its networking business and 8% growth of industry standard (PC) servers. However, other parts of the group declined: storage revenue was down 2%; business Critical Systems revenue was down 21% and technology services revenue was down 9% compared with the same period the year before.

Overall, the company reported gross margin of 23.8%, down 0.2 points year-over-year and 0.2 points sequentially.

In a transcript of the earning calls for the Q3 2015 results posted on the Seeking Alpha financial blogging site, CEO Meg Whitman said the company had taken a major step forward in preparation for splitting

“We successfully split the operations and IT systems for the company. This separation required working directly with more than 3,500 customers and partners to prepare for the cut-over. We successfully separated nearly 750 systems affecting 95% of our business with no issues,” she said.

“After shutting down for just three days to transition, critical operational systems across our business segments are live globally.”

HP has also announced the executive team for HP Enterprise and HP Inc. Hewlett Packard Enterprise will be led by current HP chief executive officer Meg Whitman. HP Inc. will be led by Dion Weisler, who currently runs the printing and personal systems group at HP.

When asked about the decline in technology services revenue, Whitman said: “When Antonio Neri ran technology services, he did a remarkable job in creating products, such as proactive care and datacentre care, that are filling the vacuum left by Itanium and a downward decline in Enterprise Group hardware revenues. 

“Technology services has not only great financial characteristics, virtually every customer needs to attach technology services so they have the ability to service their hardware in their datacentre in real time with the biggest footprint of services individuals around the world.”

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