Dive Brief:
- Hewlett Packard Enterprise (HPE) Q1 revenues were down 10% and the company cut its full-year profit forecast Thursday.
- HPE blames the miss on pressure from foreign exchange rate changes, higher commodities pricing and "near-term execution issues," CNBC reports. But, HPE CEO Meg Whitman said she still believes the company is on the right track. "The steps we're taking to strengthen our portfolio, streamline our organization, and build the right leadership team, are setting us up to win long into the future," said Whitman in a statement.
- HPE’s enterprise networking area took a particularly big hit, with sales down 33% in Q1.
Dive Insight:
Slowing demand for servers and storage equipment appear to be at the root of HPE’s troubles, as more of its customers turn to cloud-based solutions.
CEO Meg Whitman has worked to better focus HPE on enterprise sales and to get out of slow growth areas like enterprise services since HP split into two companies in 2015. Last September, HPE announced a plan to spin-off and merge its non-core software assets with Micro Focus. Last May, the company spun off and merged its IT services division with Computer Sciences Corp.
Some have been critical of HPE CEO Meg Whitman’s "slash and burn" approach to streamlining her company, but Whitman has remained steadfast that the company is moving in the right direction.
But the recent creation of enterprise tech juggernaut Dell Technologies, means HPE will now face stiff competition and could see its status as the leading provider of servers and private cloud challenged.
