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What Drove Hewlett Packard Enterprise’s Networking Revenues?

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Tsinghua deal likely to close by May 2016

According to Hewlett Packard Enterprise (HPE) CEO, Margaret Whitman, “Networking revenue grew 62% year-over-year in constant currency. Normalized for the Aruba acquisition, revenue grew double-digits, driven by record China revenue as well as good performance in other regions.”

HPE also expects market share to improve in China (FXI) as investors anticipate the completion of the deal with Tsinghua in 2015. HPE is working on the final regulatory approval, and the deal is expected to close by May 2016.

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Growing technology support solutions to drive revenues in fiscal 2016

In fiscal 1Q16, HPE saw total orders grow YoY (year-over-year) excluding China in its Technology Services segment. As stated above, customers delayed renewals until the closure of the Tsinghua transaction. Compared to networking and server contracts, the Technology Services contracts are long-term in nature.

In fiscal 2016, the performance of the Technology Services segment is expected to improve driven by a better mix of new, faster-growing support solutions.

In the second half of 2015, HPE released a wave of products across its HPE Helion portfolio. HPE Helion is a portfolio of open source software and integrated systems for enterprise cloud computing. This business also observed strong customer traction and gained over 200 customer wins since separation. Its customers include Germany’s (EWG) Deutsche Bank (DB).

In December 2015, HPE and Microsoft (MSFT) entered into a deal where the former will sell Microsoft Azure as its preferred cloud alternative. HPE also plans to use Azure on its private and hybrid clouds. HPE will also certify Azure and its services on its server line, which will enable current customers to switch easily to an Azure hybrid cloud.

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