Hewlett Packard FY 2Q16 Earnings Call Notes

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Meg Whitman

Merging enterprise services business with CSC

“earlier today, we made a major announcement that we are planning a tax-free spin-off and merger of our enterprise services business with CSC, which is expected to create a pure play global IT services powerhouse with annual revenue of more than $26 billion. The new company will have more than 5,000 customers in 70 countries and employees in every region around the world. The transaction is expected to deliver approximately $8.5 billion to HPE’s shareholders on an after tax basis. ”

HPE will focus on next generation software defined infrastructure

“HPE will now have $33 billion in annual revenue and will focus on secure next generation software defined infrastructure that leverages a world class portfolio of servers, storage, networking, converged infrastructure as well as our Helion cloud platform and software assets.”

Helion platform will sit with HPE. Managed Cloud will sit with Enterprise Services

“the Helion cloud platform as whole will sit on the Hewlett Packard Enterprise side. So for example, private cloud, we’re the world’s leader in private cloud in our Helion cloud system platform that is built on open stack. And then of course the software business around CSA and other products in terms of one point of [indiscernible] to manage a multi-cloud environment, will sit with Hewlett Packard Enterprise. However, virtual private cloud and managed private cloud is today delivered by ES and in the future will be delivered by CSC ES. And we’re going to be working very closely together to make sure that there is a seamless offering in the marketplace when someone wants a private cloud plus VPC or MPC. And then obviously, we have a relationship with Azure, and CSC has relationship with AWS”

Will give us the opportunity to do business on HPE side with some of ES’ competitors

“On the other side of it is, we do business today with some of ES’s competitors, think about Deloitte or Accenture or Capgemini or the Indian players, and we want to continue to grow that. And they are just like — for Mike, there is a benefit to being a pure play that will be benefit for us in terms of being, primarily a software-defined infrastructure company and software company. So, we imagine growing the business with those players as well.”

Objective of HPE standalone will be helping customers to modernize their IT spend

“the objective of standalone HPE will be all about helping customers optimize and modernize their traditional IT spend, which by the way is still 88% of the spend in the marketplace, and transition to a multi-cloud environment and also deploy obviously the software assets.”

Mike Lawrie

New company will be a global leader in IT services

“Both of our companies separated last year, within a month of one another into more client-focused pure-play entities, aimed at specific markets and core industries. And today’s announcement, the coming together of these two organizations is the next logical step, building on their progress to-date and significantly accelerating their transformation. The new company will be a global top three leader in IT services, one that’s uniquely positioned to lead clients in their digital transformations. Our organizations are highly complementary.”