Hewlett Packard Enterprise Company (NYSE:HPE) Q1 2020 Earnings Conference Call - Final Transcript

Mar 03, 2020 • 05:00 pm ET


Hewlett Packard Enterprise Company (NYSE:HPE) Q1 2020 Earnings Conference Call - Final Transcript


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Q & A

We will now begin the question-and-answer session. [Operator Instructions] Our first question will come from Katy Huberty with Morgan Stanley. Please go ahead.

Katy Huberty

Thank you. Good afternoon. Tarek, how much do you think the temporary factors like component constraints, the supply chain disruption from coronavirus, and the factory consolidation in North America had on total revenue?

And then as a follow up, Antonio, given how important revenue growth is for stock price performance evaluation, can you talk about the investments you're making and the timeline investors should think about to return the Company to growth? And how dependent is that path on M&A? Thank you.

Tarek Robbiati

Okay. Good afternoon, Katy. Thank you for the question. With respect to how much those short-term disruptions have accounted for our revenue performance, I would say quite a lot. There are three things that affected our revenue performance. These are the macro environment softness, the second thing is supply chain constraints, and the third one is also the manufacturing node consolidation in North America.

We've taken steps to address what's under our control. Nonetheless, coronavirus has affected the tail end of the quarter and injected a new degree of uncertainty. And when you look at the revenue performance of the Company, most of the decline came in the Compute category that we referred to in our new segmentation and that decline has a lot to do with what you referred to from a supply chain standpoint.

Antonio Neri

Yeah. Good afternoon, Katy, and thanks for the question. And just would like to add to Tarek that, we feel pretty good about the recovery in the node consolidation that's under our control. All the other factors Tarek explained very well.

In term of -- when you think about investment in long term, we have been very clear where we want to invest. Investment, obviously is in the Intelligent Edge. We see that as a next frontier, big opportunity for us. We continue to do so. And I have to say, I'm incredibly pleased with the Q1 performance because we said that business would return to growth and we show -- we demonstrated that's the case. We outperformed the market and every single competitor there, and we are very, very pleased with the differentiation we have in that portfolio with higher margin.

So for us, that's one area of investment. Much of that growth has happened organically. But we always look for -- where it makes sense for us in term of a creative addition in term of intellectual property and talent, right, that we want to continue to expand that set of experience we deliver at the edge. And as I said in my opening remarks, we are on a journey to integrate 5G and mobile edge computing on a very robust cloud-based solution called HPE Aruba Central, which is all subscription base and obviously we can deliver that through GreenLake.

Obviously, the other piece of this is what I call intellectual property to make our core business stronger.