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So why was HP’s X86 Servers’ turnaround ignored in last quarter’s call?

November 23, 2015 by ·

One-man-looking-at-anotherin-a-crowd-white-border-190x156And HP Storage and HP Enterprise Services’s non-existent turnaround emphasized so much?

Maybe it has something to do with some other aspect of the business …….. Just to re-cap, 7 out of the last 8 quarters have shown positive year-over-year growth. Last quarter was a record quarter for 3Q:

HP ISS Y-o-Y Revenue Growth 2015 10 07

So what’s the problem? Let’s look at market-share:

ISS v Dell Market-share 1280 x 720

A decline of 860 bps in global revenue market-share from 38.5% to 29.9% from 4Q10 to 2Q15 (according to IDC) might be the reason. Which is really brought into sharp focus when you look at market-share gap:

ISS v Dell Market-share and Market-share Gap 1280 x 720

Although the gap to Dell has now widened to 800 bps from a low of 560bps (D), this is less than half what it was in 4Q10 (A) – 1,740 bps. And there are no signs of recovery in market-share either: it has been pretty flat since 1Q14.

And to simplify the visual, selecting specific quarters:

ISS v Dell Market-share Gap 3 - selected quarter 1280 x 720

That’s a lot of market-share to lose. And there are no indications that ISS is making any traction in re-gaining any of that lost market-share opportunity. So maybe this is why ISS’s progress in its revenue growth is being over-looked.

Let’s see what Tuesday’s results from HP and next week’s market-share update from IDC brings.

 

Filed Under: HP Enterprise, HP Enterprise Services, HP ISS, HP Storage, Marketing, X86 server market-share ·

So What Should a Turnaround at HP Enterprises Look Like?

October 9, 2015 by ·

One man looking at another in a crowd © w white border 190x156A turnaround is going to be gradual. a progression, an evolution. Perhaps it would look like this …

  1. most recent quarter posted shows Y-o-Y growth
  2. four most recent consecutive quarters posted show Y-o-Y growth
  3. most recent posted quarter is a record quarter
  4. four most recently posted quarters are records

Well looking at HP ISS …. and this format might be strangely familiar to some of you: dark green highlighting indicates +ve Y-o-Y growth; red, negative.

Green good, red bad. Still with me? Yes?

Green with yellow bolded font shows record quarters; light green indicates weak +ve growth between 0-2% … the reason for this will be clear when we look at HP Storage.

HP ISS Y-o-Y Revenue Growth 2015 10 07

  1. most recent quarter posted shows Y-o-Y growth – YES
  2. four most recent consecutive quarters posted show Y-o-Y growth – NO
  3. most recent posted quarter is a record quarter – YES
  4. four most recently posted quarters are records – NO

So in the past 8 quarters there has been quite a lot of dark green: 7 of the past 8 quarters have shown growth which came after 8 consecutive quarters of red. So ISS clearly is showing signs of a turnaround, whereas looking at HP Storage:

HP Storage Y-o-Y Revenue Growth 2015 10 07

  1. most recent quarter posted shows Y-o-Y growth – NO.
    – The trouble with storage is that the only quarters that they’ve shown growth have been <2% of which there have been no less than four. Excluding those, HP Storage hasn’t shown significant (i.e. >2% Y-o-Y growth – dark green) since 4Q 2011.
  2. four most recent consecutive quarters posted show Y-o-Y growth – NO.
    – 5 of the past 6 are red; 10 of the past 13 are red.
  3. most recent posted quarter is a record quarter – NO
    – most recent record quarter for a quarter was back in 1Q 2011, and for 2Q through 4Q, back in 2008.
  4. four most recently posted quarters are records – NO

So that’s pretty clear. No turnaround there. But what about Technology Services, HP Enterprises’s “crown jewel” according to Meg Whitman:

HP Technical Services Y-o-Y Revenue Growth 2015 10 07

  1. most recent quarter posted shows Y-o-Y growth – NO
  2. four most recent consecutive quarters posted show Y-o-Y growth – NO
  3. most recent posted quarter is a record quarter – NO
  4. four most recently posted quarters are records – NO

Just lots of red. Well, that seems pretty straightforward. It’s just not a “great business”. And since we have mentioned them, just to complete the picture, let’s add HP Networking:

HP Networking Y-o-Y Revenue Growth 2015 10 07

  1. most recent quarter posted quarter shows Y-o-Y growth – NO**
  2. four most recent consecutive quarters posted show Y-o-Y growth – NO
  3. most recent posted quarter is a record quarter – NO**
  4. four most recently posted quarters are records – NO
    – Although while it should be noted that in 2014 all four quarters were record, they were only marginally higher than the previous three years. Indeed 1Q & 2Q of 2015 were the worst quarters for HP Networking since 2010.

**I’ve excluded 3Q 2105 because of (a) non-organic growth was only cited with currency impact excluded (and so isn’t consistent with everything else above) (b) the impact of acquisitions – and not just because there is non-organic growth that has been rather expensively paid for, but think about it: also the core business is now highly incented to perform, particularly if “adopt -and-go” is the integration approach for overlapping product segments, i.e. they had better grow or they are out ….

So why was HP Storage and HP Enterprise Services’s non-existent turnaround highlighted so much in the quarterly call?

Filed Under: HP Enterprise, HP Enterprise Services, HP ISS, HP Networking, HP Storage, Marketing, Technology Services ·
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