back to article HPE CEO Whitman says everything's 'on the right track' as sales are literally decimated

HPE's financial results for the first quarter of its fiscal 2017 are in, and they don't look good. Profits are flat and the servers, storage and networking divisions have shown double-digit declines in revenue. Overall revenues for the company were down 10 per cent from the prior-year period, and several key divisions suffered …

  1. Anonymous Coward
    Anonymous Coward

    Yesssss........

    I never get tired of reading statements about how a company's absolutely brilliant leadership is paying off .... in layoffs and decreased business. How much success can one company take?

    1. Death_Ninja

      Re: Yesssss........

      You have to wonder exactly that point don't you.

      Although on the investors call you did see some of them getting quite pointy - which is a rare thing, usually they close ranks to prevent their funds crashing in value by their own hands.

      From the call:

      Bernstein Research analyst Toni Sacconaghi pointedly asked whether the current issues stem more from market dynamics and the company’s execution problems rather than currency and memory-component issues, noting those issues should have been known and accounted for by now.

      “Most people were aware of a much tougher commodity environment in November,” Sacconaghi said. “In fact, your sister company HPQ had been calling that out well before November and had made provisions to adjust for that both in pricing and in building inventory. So I guess the question is, the only thing that really seems new, or that you shouldn’t have known about, was either the market changing or execution.”

      TBH whilst I think the likes of Meg (and similar CEO's at other similar companies) *SHOULD* be brought to the same book as the employees who take the shitty end of the stick each quarter, I don't actually think the situation is one that anyone could resolve. IT, particularly big IT, is a declining market at about 7-10% per annum. Its been like this since at least 2008 if not before. Its a downward death spiral that I think is some way off of finding its natural level.

      I'm never quite sure where the actual root cause of this decline of the industry comes from, but given that Amazon are in there with their usual loss leading cut price approach, I wouldn't mind betting its something to do with them.

      1. Anonymous Coward
        Anonymous Coward

        Re: Yesssss........

        given that Amazon are in there with their usual loss leading cut price approach

        AWS are the only part of Amazon that appears to make a decent and reliable profit, so I'm not sure it is loss leading as such. Otherwise an excellent comment.

        Because of the commodity nature of the bit-barn market, it is a cut throat market with severe margin pressure, and market prices set by the lowest offer. HP will never be competitive in this market, and even when they've shifted their last US/European employees jobs to some scummy offshore location, they'll still be uncompetitive.

    2. macjules Silver badge

      Re: Yesssss........

      "Why is all this wood here? I can't see any trees."

    3. Anonymous Coward
      Anonymous Coward

      Re: Yesssss........

      You'll get tired of winning ....

  2. Anonymous Coward
    Anonymous Coward

    Gee

    Gosh, maybe customers don't like being told that the expensive server they bought, can only be updated (with fixes for bugs YOU released) if you pay up to wazooo for a maintenance contract.

    I'm referring of course to their idiotic decision last year? sometime that you can only get BIOS updates and firmware for your server, based on serial number, if you pay extra for the privilege. No thanks HP!

    I hope she continues with her mission for a 3rd yacht and another private jet cause forgetting all about your customer is how you make it to the top!

    1. Anonymous Coward
      Anonymous Coward

      It gets even worse

      "I'm referring of course to their idiotic decision last year? sometime that you can only get BIOS updates and firmware for your server, based on serial number, if you pay extra for the privilege. No thanks HP!"

      Buy a server and find that their system says its warranty has already expired.

      Buy a 3 year service contract and find that it only lasts 2.5 years.

      Never again.

      1. P. Lee
        Coat

        Re: It gets even worse

        See how much easier it would be if you used their cloud?

        1. Anonymous Coward
          Anonymous Coward

          Re: It gets even worse

          Except that they have closed their public , sold the openstack bus to SUSE and fired the guy in charge so their core busines is f****d and their cloud business is dead. SELLLLLLLLLL!

      2. Gerhard Mack

        Re: It gets even worse

        Buy a next day service contract and discover that when you actually need it, the server is "too old" and it will take them two weeks to replace it.

      3. Miss Lincolnshire

        Re: It gets even worse

        That's HPI not HPE

    2. LDS Silver badge

      "if you pay extra for the privilege"

      How do you pay otherwise for that $750M buyback - despite the decline in revenues? An I'm sure you correctly guessed where those millions went....

    3. Anonymous Coward
      Anonymous Coward

      Re: Gee

      "The Track" being one off:

      Bloat the finance division enough to turn it into a bank, while neglecting anything else, then when that venture fails too, get one of those "no questions asked zero fucks given" bailout and become part of the too-important-to-fail club.

      Use an LLC to secretly buy credit defaults on the HPE debt, then run the business into the ground, forcing a default and collect big. Spend your early retirement doing speeches, advising politicians and writing bad philosophy books.

      Of course I offered to run the business into the ground for much less and in a shorter time thus maximising CEx value extraction, but, sadly, competition is not wanted nor appreciated at the CEx level.

    4. Anonymous Coward
      Anonymous Coward

      Re: Gee

      sometime that you can only get BIOS updates and firmware for your server, based on serial number, if you pay extra for the privilege. No thanks HP!

      So much this. We just bought 40 HP G9's, and even with a warranty and a support contract, getting drivers and firmware updates is a royal pain in the ass.

      1. Sandtitz Silver badge

        Re: Gee

        "So much this. We just bought 40 HP G9's, and even with a warranty and a support contract, getting drivers and firmware updates is a royal pain in the ass."

        All drivers and firmware are there for anyone to download without any login required. The only problem with HP(E) is that the website is damn slow and I get occasional 404 errors.

        Denying BIOS download without login sucks, but I have not had problems to login and download after registering a server.

        1. robertcirca

          Wait a little bit ....

          There are no more freee BIOS upgrades and Service Packs for Proliant (SPP) when the warranty period is over.

          You will need a service contract to download a BIOS upgrade. The rest is still for free.

          1. Anonymous Coward
            Anonymous Coward

            Re: Wait a little bit ....

            The best things in life are free. But you can keep them ...

        2. Anonymous Coward
          Anonymous Coward

          Re: Gee

          So do the updates work? Just curious. We live in w world where the successful vendors are the ones who know how to cut fat, and not bone ...

          1. Sandtitz Silver badge

            Re: Gee @AC

            "So do the updates work? Just curious."

            The BIOS updates, once you get a hold of them, work on out-of-warranty servers, the binaries don't contain any additional logic to check for valid warranties/subscriptions/service contracts. Yet.

  3. Schultz

    Managed decline

    It's sad to see HP dwindle, but it's hard to see how this company could become great again. I wouldn't even blame their management, not every company can hit the jackpot all the time. It's just hard to see why they need an expensive management to do what they are doing.

  4. Anonymous Coward
    Anonymous Coward

    I wonder who that "unnamed tier one" customer was that dropped HP. It has to be someone huge to make that large of a dent.

    1. jeff_w87

      I wish it was DoD as NMCI gets worse every day thanks to HPe winning that contract.

    2. Anonymous Coward
      Anonymous Coward

      Not hard to figure out. Huge consumer of x86, big buddy of HPE, now sharing the love across a couple of vendors so nobody feels left out.

  5. Captain DaFt
  6. @omgwtfbbq69

    I'm going to be surprised if there's an HPE at all in 5 years. I think a tie up between them and Cisco or similar is going to happen. They're the new (and old) DEC. The Helion debacle speaks volumes.

    1. Anonymous Coward
      Anonymous Coward

      No HP in 5 years?

      There won't be!

      In a few months they're merging with CSC and if they have any staff left (via redundancies and staff leaving due to being sick of being under constant threat of being made redundant) they will be called (and I'm not joking, someone must have been paid to suggest this) DXC Technologies.

      I believe it should be pronounced Dicks....

      1. Anonymous Coward
        Anonymous Coward

        Re: No HP in 5 years?

        It is only the ES bit of HPE that is merging with CSC; HPE will continue after the merger. Also, the other bit of 'old' HP, HP Inc remains, selling laptops, desktops and printers.

        However I CAN see the HP name disappearing; post-merger HPE could well be bought by another network vendor, and HP Inc could be bought by someone (Lenovo, Dell?). Voila, the once-great HP becomes a memory...

        1. Anonymous Coward
          Anonymous Coward

          Re: No HP in 5 years?

          HPE in five years will be called HP ProLiant ....

      2. Porco Rosso

        Re: No HP in 5 years?

        Cisco John Chambers predicted said it in 2014

        http://www.businessinsider.com/cisco-ceo-brutal-times-for-it-coming-2014-5

        And I guess IBM & HPE are the two who will be gone,

        if you look how there respective Captains are steering and managing there Big Tankers to new harbours its crazy. They don't even now to witch harbours to go ...

        Booth company's management are more busy to play the HedgeFunds game than to be 100% focused to transit there company and troops to the new IT reality.

  7. jeff_w87

    They've definitely gotten worse since the split. Service used to be great, now it's just barely serviceable - 4 hr service that we pay for usually turns into days because "the part is not available". All our next servers are definitely not going to be HP.

  8. Anonymous Coward
    Anonymous Coward

    Well Meg, how's the pay cut then?

    Wot? You didn't get one despite your sales tanking?

    Even Tim Cook over at Apple took one when their profits dipped and you didn't?

    Now you are thinning the ranks even further of the people who you need to restore those revenues...????

    I guess soon everything will be overseas and you will have to fly someone halfway around the world to fix a server problem.

    How times have changed.

    I still have me old Field Service Tooklit that includes a wirewrap tool. You probably don't know and more likely don't care what one of those is but we all had them along with an ethos of making the customer happy and they'll not go to Dec, IBM, DG and the rest.

    Do you only care about being able to get a yacht the same size as your friend Larry? It seems it from here.

    Carry on this way and in two years the only people you will have left are your BOD and a few YESMEN who will keep telling you that the world is rosy and everyone wants to do business with you.

  9. Anonymous Coward
    Anonymous Coward

    Run by idiots. Bye bye HP.

    "Whitman admitted the results were mixed but blamed a number of outside factors depressing growth."

    Perhaps the fact that for the last 15 years or so, the company's CEO's have been incompetent idiots with no ideas or vision who aren't fit to open a tin of baked beans and are only interested in 'increasing revenue for our stakeholders'.

    What was once a great company - both in terms of their products and as a place to work - has been systematically destroyed by people who absolutely do not care about the company and have no clue about what happens to it in the future because they'll still get a big wedge of cash out of it whatever happens.

    A once truly great company which started in a garage will shortly be available very cheaply in a garage sale. An absolute travesty and an insult to the memories of Bill Hewlett and Dave Packard.

    1. Potemkine Silver badge

      Re: Run by idiots. Bye bye HP.

      Most companies start to die when they start to be led by managers instead of entrepreneurs.

      1. simonlb Silver badge

        Re: Run by idiots. Bye bye HP.

        'Most companies start to die when they start to be led by managers instead of entrepreneurs.'

        Oh dear, you couldn't be more wrong! The beginning of the end for HP was when Carly Fiorini decided to merge with Compaq so that HP could say they had a decent Windows server and desktop offering. HP's engineering staff were that good she could have set them a three or five-year plan to design, test and bring to market a range of servers and desktop PC's which would have put them easily on a par with IBM if not market leaders. Forget about Dell, they would have beaten them no problem.

        However, she took the 'easy' way out and went for the merger which tipped the company over the edge to becoming just another big corporation where the people in charge don't care a jot for the history and core values which made their employer so great in the first place, and place quarterly results above quality, customer satisfaction and their own staff. Cue a succession of clueless CEO's and their cronies who decimated any hope the company had left of ever being a market leader.

        And the last time they showed any hint of innovation was with the Touchpad tablet, which was actually very good, but they priced it squarely against the iPad which was totally bonkers. If they'd priced it at the low to mid-range Android tablets of the time as a loss-leader for a year, they'd have built an ecosystem for it and it would by now be a credible and well developed tablet platform. Instead they bottled it, threw it all away, and are now peddling mediocre Android based tablets which aren't a patch on the original Touchpad and aren't bought by anyone who has any idea about tablets.

  10. Anonymous Coward
    Anonymous Coward

    Yet strangely HPE is still one of the best performing tech stocks over the past couple of years! Suddenly Meg is getting criticised but people seem to forget where we (yes I work for HPE obviously) were 5 years ago. Combined (HPE and HPQ) stock price of about $12, now trading as HPE alone in the mid 20's. There's definitely challenges for largely infrastructure providers such as HPE so the rest of the year will be more telling than this one quarter (which was against a tough compare). And revenue for show, profit for dough, and the GM improved.

    1. Anonymous Coward
      Anonymous Coward

      You might want to widen your view

      Recent ex HPE'er here.

      From a share price perspective the combined performance is still nowhere near the $40-$50 range it was in when it was a larger combined entity, before the pillock that was Apotheker. Yes there has been an improvement since the split but it still lags massively behind its peers in overall valuation and it would be stupid to take 12 months of stock growth as any indicator of long term performance or success.

      The growth it has experienced has felt more like a bet on the likely direction than anything based on reality, I suspect the next few weeks will see the stock decline as those optimist investors get scared and move on.

      I can't see how HPE can dig itself out of this hole. If you look at the industry direction and trends, cloud, IoT, analytics, machine learning etc, HPE has spent the past 12 months divesting itself of all assets that relate to these areas, Helion, Autonomy, Software etc.

      All that is left is tin, meaningless "partnerships" (smacks a bit of a 50 year old hanging round with teenagers to try and get street cred!) and some marketing buzzwords slapped on presentations, hardly enough to have a value based conversation with its customers!

    2. thomn8r

      Yet strangely HPE is still one of the best performing tech stocks over the past couple of years

      A) you should know by now that stock price has absolutely no correlation to a company's actual performance

      B) how much of that performance is being subsidized by stock buybacks?

    3. Anonymous Coward
      Anonymous Coward

      mmm, but i also work for HPE and my thoughts when Meg joined that she deliberately drove the share price in to the ground in her first year, when it was easy to blame previous leadership.

      Sadly the company is not in a good place to be right now, in addition to the quarterly culling, i am seeing more and more 'good people' who HPE want to keep that have had enough and are jumping ship voluntarily.

  11. Dabooka Silver badge

    Mind the GAAP

    Didn't GAAP confusion drop them in it when buying Autonomy? So which iteration of GAAP are these based on? Or is that just an excuse for covering up a balls up?!

  12. Anonymous Coward
    Anonymous Coward

    Fear not a fix is easy in CEO land

    Rest assured the solution to this mess is already at hand. With those that put their hand up for VR now confirmed the Compulsory Redundancy process started today in the UK. Get those bodies out the door Meg, you pointless one trick pony.

    Last working day 29th March apparently. If she pings me my last 'working' day will be sooner than that.

    1. Warm Braw Silver badge

      Re: Fear not a fix is easy in CEO land

      one trick pony

      That's not entirely fair. Her experience also includes children's shoes, Mr. Potato Head, the Teletubbies and Disney. She's clearly not constrained by domain-specific expertise.

  13. fredesmite Bronze badge

    There is a reason "INVENT " was removed from the logo

    ... and replaced by "Outsourced to the lowest bidder " .

    Good riddance.

    1. thomn8r

      Re: There is a reason "INVENT " was removed from the logo

      They should change it to "HP INVERT"

  14. Anonymous South African Coward Silver badge

    Ahhhhh

    Probably the new way of running businesses these days.

    Last year we decided on intel (servers) and thecus (NAS) - glad we did not go the HP route as things are not looking good.

    And also...

    What is a cheap country? One where the cost of living is low? Or standard of living is low? :)

  15. shub-internet

    SCROTUS won't like Meg...

    For what was an American icon, moving all its employees to 'low-cost' countries seems hardly the way of SCROTUS. After all, he's outsourced governance to Goldman Sachs, a proud US company, and certainly not 'low-cost'...

  16. Anonymous Coward
    Anonymous Coward

    Innovation

    As a competitor to HPE what we really see is a lack of innovation.

    They seem to be trying to buy their way into markets (e.g. purchase of SGI and Simplivity),

    rather than actually innovating themselves.

    We often see them buying their way into an account and you wonder if they are going to make any profit at all.

    1. Anonymous Coward
      Anonymous Coward

      Re: Innovation

      There is no one left with half a brain to do any innovation. Those with half a clue have voted with their feet and gone to pastures new years ago. I got my P.45 eight years ago despite me team making wekk in excess of our targets. They fired the whole lot of us. Four of the team set themselves up and took a load of our customers with them. They are making lots of money that could have been HP's but the bean counters were blind to the effects of their actions on the bottom line. Still seems to be happening now.

      I changed track and went in a different direction that my colleagues. I have no regrets in my now virtually stress free life.

    2. Miss Lincolnshire

      Re: Innovation

      That was much of where they went wrong with EDS

      HP bought what was an independent service delivery company and immediately went hard sell on HP products which spooked the clients and has ultimately led to losing contracts. I lost count of the number of challenges I got when I wanted to buy Ultrasparc 4s off Sun instead of HPUX. Even when i pointed out that the solution, that we did not write or control, was designed to run on Solaris i still got blocked because the hard sell goggles were on.

      If there is one positive in the merge with CSC it's the return to being agnostic over platforms. It'd be good to get Dell laptops again too.

      1. Anonymous Coward
        Anonymous Coward

        Re: Innovation

        You must have missed two things:

        1) DXC (that's the name of CSC+HPES, for some reason unreported by El Reg) has to push HPE hardware for three years. Independent my arse.

        2) CSC currently uses Lenovo laptops but you won't be seeing one until your current HP lappy won't support the Windows 12 rollout.

      2. Jay 2

        Re: Innovation

        I seem to recall not too long ago if you had such a contract with IBM (or some bit of them) they wouldn't care what you wanted to purchase, as long as it (and support etc) was via them. If what you say is true, which I don't doubt, then it may explain quite a bit!

    3. ManMountain1

      Re: Innovation

      Show me a traditional competitor of HPE that is innovating. For years, all the innovation in this industry has come from small startups who are hoping to get bought! Innovation in big companies is always hard as you often need to start with a blank sheet of paper, and that's tough to do when you have a customer base to serve and shareholders to appease.

    4. Anonymous Coward
      Anonymous Coward

      Re: Innovation - not so much

      HP hasn't invented in decades. HP buys innovation and then gets that wrong half the time losing untold $billions.

      1. ManMountain1

        Re: Innovation - not so much

        Which big company doesn't buy 'innovation' these days? NetApp? Dell / EMC? Cisco? Stop me when I get even vaguely warm?

  17. rtb61

    Please Fire Me

    You want to see stupid see this http://www.businessinsider.com.au/whitman-gets-51-million-if-hp-axes-her-2015-3?r=US&IR=T, no matter how shitty a job she does, which of course is self evident, she gets paid 51 million when they fire her, seriously, how screwed up is that.

    How many people would do a shitty job on purpose just to get fired.

  18. luis river

    very bad memory

    The people has very bad memory, makes very little time HPE was practically the only company that had them best figures of sales of companies IT (growth) while others e.g. IBM takes near 20 Q down your billing. I'm sure that this decline is cyclical. I advise the defeatist people to take high doses of anti-depressants.

    1. Anonymous Coward
      Anonymous Coward

      I advise the defeatist people to take high doses of anti-depressants.

      Luis, I'm not sure how ethical that advice is. But hell, I'll give it a shot.

  19. Anonymous Coward
    Anonymous Coward

    Leo's Autonomy not withstanding, he had the right vision in that Software/Automation/Analytics was the key to the future. I think Leo takes too much BS, but his vision was the correct one. Meg's vision is all hardware/infrastructure focused and very little around the intelligence needed to drive value and benefit for customers. There's only so much intelligence you can employ within hardware itself to make a difference for where technology is going.

    Meg's focus has always been about her and to a degree shareholders in that she drives to get to the numbers thru laying people off, consolidating and expense management...there's only so much of that you can do before your products and customer Care/Service starts to dry up. Selling off HP Software was the last nail in the coffin. She'll go off into the sunset thinking she did something wonderful at HP when all she did was markedly contribute to its demise....

  20. Brian Allan 1

    Lost Trust

    We stopped dealing with HP years ago due to a total loss of trust in anything the company told us! Nothing like promises never kept to lose clients.

  21. YARR

    If most of your customer base are in developed economies but most of your cost base (employees) are in developing (offshore) economies, then your business is acting as a drain on developed economies and a boost to developing economies. Hence it should come as no surprise that your existing customers have less money to spend. If growth is desired, perhaps it's time to seek out new customers in developing economies?

    On a side note, do photos of senior management generally look less flattering when accompanying poor financial results?

    1. Wensleydale Cheese

      On a side note, do photos of senior management generally look less flattering when accompanying poor financial results?

      Next time you are perusing the financial press, keep an eye out for senior management mugshots accompanying articles about companies reporting bad results.

      Invariably, such mugshots were taken in happier times and it can be quite surreal looking at a set of beaming faces under a headline reporting a disaster.

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