WASHINGTON: Hewlett Packard Enterprise (HPE) reported its second quarter fiscal 2017 earnings on May 31, showing some weakness in server revenues, which were attributed to a single Tier 1 operator customer. For the quarter, HPE reported net revenue of $7.4 billion, which is a 13 percent year-over-year decline. Among the areas that declined during the quarter was HPE’s server business, which declined by 14 percent. During HPE’s financial analyst call, CFO Tim Stonesifer reported that server revenue declined due to tier 1 hpeweakness as HPE deemphasizes the category to focus on more profitable areas.
During the question and answer period, CEO Meg Whitman added further color on the 2Q17 server revenue decline. Whitman noted that the tier 1 service provider server segment is one that HPE entered into approximately two years ago and HPE is heavily dependent on one customer. Whitman said that HPE expects that server purchases from the one tier 1 customer will continue to decline over the next several quarters. While the tier 1 server revenue is pulling HPE’s overall server revenues down, there are areas of growth. In particular, HPE reported that its High-Performance Compute (HPC) segment grew by 40 percent, with SGI servers growing over 20 percent. HPE acquired SGI in August 2016 for $275 million. “We are seeing strong demand from companies like global chemical company BASF, which recently selected HPE to build one of the world’s largest supercomputers based on HPE’s Apollo Systems,” Whitman said.
