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HP Sees Networking Revenue Up Ahead of Split

Dan O'Shea
11/26/2014

Hewlett-Packard showed 2% revenue growth for its networking products in what was an otherwise weak fiscal fourth quarter, as the company prepares to split into two entities, one focused on personal systems and printing, the other aimed at networking, storage and software for companies pushing into SDN and cloud NFV.

For the fiscal fourth quarter, HP Inc. (NYSE: HPQ) reported total revenue of about $28.4 billion, down more than 2% year-on-year. For the full fiscal year, total revenue was down about 1% to $111 billion.

The 2% nudge in networking revenue to $669 million may help HP Enterprise, the networking/storage/software spinoff, start out on the right foot. Overall, that group under the current corporate structure saw revenue down about 4% for the quarter -- networking was only portion that was up. (See HP to Split Into Two Companies.)


Want to know more about SDN? Check out our dedicated SDN content channel here on Light Reading.


HP CEO Meg Whitman, who will be president and CEO of HP Enterprise, acknowledged on the earnings call ongoing market challenges for many HP groups, including growing competitive pressure in foreign markets. She cited the potential for both new HP spinoffs to participate in M&A activity heading into next year.

"We remain interested in acquiring assets if it's the right thing to do for what will become HP, Inc. [the personal systems/printing spinoff] or HP Enterprise," Whitman said, adding, "But, we'll remain disciplined and not do things that aren't in the best interests of shareholders." Those comments come after EMC Corp. (NYSE: EMC) reportedly was discussing a merger with HP, though those discussions were said to have ended. (See EMC Mulls Merger With HP or Dell – Reports.)

Whitman did mention "SDN and networking" as one of several growth areas for HP in 2015, though did not get into further specifics. The company appeared to boost its hopes in the cloud NFV market earlier this month by aligning with Nokia Networks to support its OpenStack Helion cloud platform. HP also recently announced an SDN applications store for service providers. (See Nokia, HP Stack Their Cloud NFV Bets and HP Launches SDN App Store.)

HP officials also said on the call that it still hasn't reached its goal of cutting 50,000 jobs. About 41,000 employees left the company during fiscal 2014.

— Dan O'Shea, Managing Editor, Light Reading

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Ariella
Ariella
12/1/2014 | 6:51:16 PM
Re: juxtaposition
@DoShea thanks for that clarification.
DHagar
DHagar
12/1/2014 | 1:43:19 PM
Re: HP Networking Revenue Ahead
 

SachinEE, that does make sense.  They are at least structuring HP to optimize both business lines; that should give them the chance to succeed.
DHagar
DHagar
12/1/2014 | 12:58:11 PM
Re: HP Networking Revenue Ahead
briandnewby, I am with you on your assessment.  HP definitely has their work cut out for them; but they are at least acknowledging the need for change and positioning themselves to succeed.  We will see if that is enough - it is more than others are doing!
DOShea
DOShea
11/30/2014 | 9:35:50 AM
Re: juxtaposition
@Ariella - I believe this was the phrasing used on the call, and Whitman was quite vague overall on the topic. However, looking through past reports, the jobs cuts have been consistently referred to as layoffs, so I probably should have been clear on that. Also, there's a growing belief HP will cut at least 5,000 more jobs on top of what had been planned as the split occurs, though Whitman didn't specifically say so on the call. So, that would put the ultimate total of layoffs around 55,000.
Kruz
Kruz
11/29/2014 | 9:33:54 AM
Re: juxtaposition
Most probably these 40k employees are offered a favorable exit package that is appealing enough for them to leave quietly without the need for a layoff process. Similar to what happened at NSN, 2 years ago in its 20 k job cut
Ariella
Ariella
11/28/2014 | 9:09:04 AM
juxtaposition
<HP officials also said on the call that it still hasn't reached its goal of cutting 50,000 jobs. About 41,000 employees left the company during fiscal 2014.>

So the company wants to get rid of 50K, but only 41K have left. The way it's presented makes it sound like they chose to leave. Is the company asking for voluntary early retirements and such to avoid laying people off against their will?
SachinEE
SachinEE
11/28/2014 | 8:34:17 AM
Re: HP Networking Revenue Ahead
It is a good strategic move. To think HP can come out with all the downside and still aquire to make better business, this shows a unified business policy from both halves.
MikeP688
MikeP688
11/27/2014 | 11:31:17 AM
Re: HP Networking Revenue Ahead
Hello Sir and Happy Thanksgiving :-)

I am routing for them--they have a fabulous Engineering Tradition that I hope endures.    Meg Whitman is not to be sold short either--that's for sure.   The question is whether in this "new enviornment" we are in, HP as separate entities can go it alone.

:-)

 
briandnewby
briandnewby
11/27/2014 | 11:14:20 AM
Re: HP Networking Revenue Ahead
True, but the overall viability of HP is to be admired, given the last few years before Meg Whitman.   I'm not a fan of minding the store, which, comparably is what I think Dan Hesse did at Sprint.  The performance seems similar on the surface, but I don't think that's what she's done--it does seem like survival has been an accomplishment.
MikeP688
MikeP688
11/27/2014 | 2:15:33 AM
Re: HP Networking Revenue Ahead
The need to have competition is ever so crucial.    It is kind of tragic to see such luminaries undergone such radical transformation as HP is going through.   Although it is welcome that HP's networking business saw the increase, the question is whether they're ready to embrace the Software-Defined Networking environment in a major way though.    

The long-term viability of HP as a separate entity to me is an open question.   
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