Stock fell 12% last month
The stock of hardware technology (QQQ) firm Hewlett Packard Enterprise (HPE) fell almost 12.0% in June 2017 to close at $16.59. The stock has fallen 28.3% since the start of 2017 and 30.0% since March 31, 2017.
HPE has had a disappointing year after its stock rose over 50.0% in 2016. It’s been on a spin-off spree for the last 18 months. In April 2017, it completed the merger of its Enterprise Services business with Computer Sciences (CSC). The merger of its software business with Micro Focus is expected to be completed by the end of fiscal 2017.
Initially, investors and analysts were optimistic when HPE announced the spin-off from Hewlett-Packard (HPQ) in November 2015. That meant HPE could concentrate on its core operations. However, a difficult macro environment has resulted in declining revenue for Hewlett Packard Enterprise. In addition, competition from heavyweights such as Cisco Systems (CSCO) and China’s Huawei have also impacted its market share and ability to grow revenue in mature markets.
Will acquisitions benefit HPE?
HPE has been looking to drive revenue through acquisitions. In November 2016, it acquired SGI, and in 2017, it acquired SimpliVity. SGI is one of the market leaders in the computing space, growing revenue at a CAGR (compound annual growth rate) of 6.0%–8.0%. SimpliVity was acquired for $650.0 million and could help HPE target businesses in the hyperconverged market.
HPE also acquired Niara, a network security company that utilized big data and machine learning to determine network attacks.