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How Did HPE’s Enterprise Group Perform in Fiscal 4Q16?

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Revenue fell 9% YoY

Hewlett-Packard Enterprise’s (HPE) Enterprise Group revenue was $6.7 billion in fiscal 4Q16, a fall of 9% YoY (year-over-year). Its revenue fell 2% YoY after adjusting for currency fluctuations and divestitures. The operating margin for this business segment was 13.2%. In this segment, server revenue fell 7%, storage revenue fell 5%, networking revenue fell 34%, and technology services revenue fell 4% YoY in fiscal 4Q16.

Profit margins in HPE’s Enterprise Group have steadily improved over the last two quarters. According to the company, it’s confident that cost savings and product mixes in software-defined solutions, storage, and networking will offset falling demand for core servers in the long term.

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During the company’s fiscal 4Q16 earnings call, chief financial officer Tim Stonesifer said, “In the Enterprise Group, we continue to work on improving operating margins by focusing on profitable deals, reducing discretionary spend, and delayering as we right size the organization ahead of the separation from ES and software.”

Enterprise Group streamlined

When HPE released its fiscal 3Q16 results, Meg Whitman, the company’s CEO, stated that its Enterprise Group businesses had been streamlined. 

Hewlett-Packard plans to consolidate all corporate marketing and sales efforts under a single marketing function. The company has announced that Hewlett-Packard Labs will integrate with the Enterprise Group business, helping the company to better align its research activities.

The operating margin of the Enterprise Business was 11.7% in fiscal 2Q16 and 8% in fiscal 3Q16.

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