HPE turnaround in sight following strong Q3 earnings and another acquisition

Dive Brief:

Hewlett Packard Enterprise beat analysts' expectations Tuesday, reporting an $8.2 billion Q3 revenue, up 3% year-over-year. The company's enterprise group — which accounts for more than 80% of its revenue — also saw a revenue increase of 3% year-over-year to $6.79 billion, bolstered by strong growth in its networking and storage segments.
HPE's promising Q3 earnings reports came just after the company announced its acquisition of Cloud Technology Partners, a move which strengthens its consulting practices with hybrid IT and the cloud. CTP helps customers move to, innovate and operate in the cloud across diverse platforms like Amazon Web Services, Microsoft Azure and OpenStack. The purchase marks HPE's fifth acquisition this year, Fortune notes.
For CEO Meg Whitman, HPE's earnings are an "encouraging sign" of the company's progress, she said in an earnings statement. Execution on the portfolio continued to improve over Q2 and the company reduced costs in the organization, Whitman said during the earnings call. "Our strategy is clear: To make hybrid IT simple, to power the intelligent edge and to provide the services to make it all happen."

Dive Insight:

Since 2015, when Hewlett Packard split into two companies, analysts have tried to forecast how the individual organizations would fare. While HP Inc. saw promising growth, HPE struggled with revenue declines while divesting assets to streamline its focus. Positive Q3 results are a boon for HPE, potentially marking the start of a turnaround for the company and an affirmation of its strategy.

In what the company calls a "spin-merge," HPE last week divested its non-core software assets to Micro Focus in an $8.8 billion deal. The move was the company's last major portfolio change, allowing it to start building in new areas.

HPE is looking to focus on more hybrid enterprise IT solutions and cloud and infrastructure products. By acquiring CTP, the company is expanding its services group to reflect how it believes companies' IT needs are changing. Customers are beginning to adopt portfolios of solutions as part of IT strategies, incorporating private and public cloud along with managed offerings.

HPE is now in a position with a refined product portfolio to build hardware for companies while also helping customers implement solutions for the modern era of IT.