Hewlett Packard Enterprise Company (NYSE:HPE) Q1 2016 Earnings Conference Call - Final Transcript

Mar 03, 2016 • 05:00 pm ET

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Hewlett Packard Enterprise Company (NYSE:HPE) Q1 2016 Earnings Conference Call - Final Transcript

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Q & A
Executive
Margaret C. Whitman

stock is trading right now, we think that this makes a lot of sense to buy back shares, which is why we've decided to go to 100% of the free cash flow.

Analyst
Sherri A. Scribner

Thank you.

Executive
Andrew Simanek

Great. Thanks, Sherri. Next question, please.

Operator
Operator

The next question will come from Kulbinder Garcha of Credit Suisse.

Analyst
Kulbinder S. Garcha

Thanks. I just have a couple of clarifications, actually. Maybe for Meg, first of all, and Tim touched upon this. You talked about how you're seeing constant currency revenue growth over several quarters. All businesses have grown since the end of 2010. Are we now at the point whereby this business might sustainably at constant currency in revenue terms just grow? I'm not asking for a number of percentage growth rate, but do you think you have that visibility? Because the reason why I ask is, Tim also mentioned visibility in January, and obviously, we can see what the markets have been doing and the macro. So I'm kind of curious as to how we see sustainable growth of the business?

And then also, just for Tim, on the Enterprise Services margin guidance and the growth guidance for this year, given the contract value growth, given the mix shift you're seeing in the business, the cost changes you're putting through very well, why isn't -- that guidance just seems for Enterprise Service is now very conservative. So is there some caution you're reflecting in that guidance in the balance on the Enterprise Services side specifically? Many thanks.

Executive
Margaret C. Whitman

Yeah. So on the overall growth rate of the Company, remember, we said at the beginning of this year that we would grow Hewlett Packard Enterprise in revenues in constant currency, and we are on track to do that as you can see from Q1. Again, from an as-reported basis, the compares get earlier -- I mean, get better in the second half of the year, because we've worked through those big currency fluctuations in Q1 of last year.

And I think your question is, can we see accelerated growth. I think, we just are a little concerned about the macroeconomic environment. We saw a slowdown in the US in the last three weeks of January. Linearity appears to be back on track, but it's early in the game, and so I think we're just being a bit cautious here. We like our product portfolio. We like our go-to-market changes. We like our innovation engine. There's a lot of things that we're feeling very good about, but the macroeconomic environment still has pockets of weakness.

Russia continues to be a big challenge, the Ukraine, parts of Latin America. China right now for us is doing well, but that can change at any minute. So, we feel great about the stated goal of growth in constant currencies, and let's see how the macroeconomic and sort of the political environment changes over time.

Executive
Timothy C. Stonesifer

Sure. And then on the ES point, again, we feel great about the progress we've made in the first quarter. We