HPE says there will be no further cost cuts as it posts lower Q4 2019 revenue

HPE has reported a 9% drop in net revenue to $7.2bn for the fourth quarter of 2019.

The company reported revenue of $723m in its intelligent edge business, while its hybrid IT business posted revenue of $5.7bn.

CEO Antonio Neri said: “Through our disciplined execution, we improved profitability across the company, while sharpening our focus, transforming our culture and delivering differentiated innovation to our customers as they accelerate their digital transformations. I am confident in our ability to drive sustainable, profitable growth as we continue to shift our portfolio to higher-value, software-defined solutions and execute our pivot to offering everything as a service by 2022.”

Earlier this month, the company extended its hybrid computing offering with the introduction of the HPE Container Platform,which provides a Kubernetes-based container platform for both cloud-native and non-cloud-native applications. HPE said the new platform can run non-cloud-native monolithic applications that require persistent storage, and has the ability to run containers on bare metal servers. The platform also supports platform virtual machines (VMs), public clouds and computing at the edge, it said.

In a transcript of the earnings call posted on the Seeking Alpha financial blogging site, HPE chief financial officer Tarek Robbiati responded to a question about lower net revenue by stating: “The revenue for us was stable, hovering above the $7.2bn mark for Q2, Q3 and Q4. What is interesting in this is the underlying profitability of the revenue, which has materially improved as a result of some actions that we have taken shifting the mixed structural improvements in the products.

“We are not going to cut costs materially. The reason is, we do believe that we have to continue to make the investments in R&D in the key strategic areas of our business, the edge being one of them.” 

During the earnings call, Neri told the analysts that HP was continue to roll out its HPE Next programme to reduce operating costs and boost efficiencies. “This is year three, and we are super, super pleased with the outcome and we expect to continue to derive productivity from what we have done in the previous two years,” he said. “Understand there is one more year to go here, which will complete the programme.

“But as Tarek said, we will always look for opportunities to improve the productivity of the business by improving the way we engage customers and partners, and obviously we still need to get a lot of the benefits of the investment we’ve made in IT.”

Neri also discussed HPE’s strengths in edge computing, with its Ariba product family, and described the Ariba business as well positioned for digital transformation, which requires strong network security. Aruba Central is HPE’s enterprise and mid-market as-a-service offering for edge computing, while Aruba Instant On provides edge computing security for the SME market.