Hewlett Packard Enterprise Co. president and CEO Meg Whitman, who has been racking up acquisitions to stay competitive in the age of cloud computing, said the company’s shopping spree may not be over. “I think you will see acquisitions become a bigger part of our strategy,” Whitman said in an interview Tuesday in Las Vegas at the company’s Discover conference.
The company, based in Palo Alto, Calif., has already unveiled purchases so far this year worth more than $1.5 billion. Whitman is hunting for tools that would help boost demand for the company’s main server and storage products, seeking to push back against direct competitors such as Dell Technologies, as well as cloud-computing providers such as Amazon.com Inc. She’s spent the past few years slimming down HPE, including splitting off the personal-computer and printer business and shedding some services and software units in multibillion-dollar deals. Now, she said, it’s more clear where the company’s resources should be spent.
“Back when we were an enormous company with six or seven operating divisions, there were a lot of mouths to feed,” Whitman said. “Printing wanted to make acquisitions. PCs wanted to make acquisitions. Software wanted to make acquisitions. Now, we have a much more focused strategy.”
Still, acquisitions aren’t the only way to bolster the company’s prospects—Whitman said it’s just one of the three main ways to drive success. Another is innovation in HPE’s main product lines, such as improvement in servers, expanded storage offerings and advances in networking.
The third area is HPE’s Pathfinder program, which invests in younger companies. Whitman said it’s a great way to get innovation without taking a financial hit. “There are a number of companies that I think would be quite interesting to buy,” she said. “The problem is they have $20 million of revenue and they lose $150 million.” Whitman is holding the annual Discover event this week after the company gave a disappointing update on its financial picture last month. Profit excluding some costs will be 24 cents to 28 cents a share in the current quarter, the company said, while analysts had projected 32 cents. The company affirmed its fiscal-year outlook for adjusted profit of $1.46 to $1.56 a share compared with analysts’ estimates of $1.52.
Revenue was $9.9 billion in the quarter that ended April 30, compared with an average analysts’ projection of $10.09 billion. The company has already been trying to improve those sales with acquisitions. In April, Hewlett Packard Enterprise bought Nimble Storage in a deal valued at about $1 billion, adding to its lineup that helps customers with data storage. That followed a handful of purchases earlier this year, including $650 million for SimpliVity, which also helps its storage line, and Niara, a security startup.
As for purchases in the future, Whitman said the company would stick to its core business that includes servers, storage and networking that can help customers keep up with advances in connected devices—known as the Internet of Things—and hybrid computing, which includes cloud and on-site technology. And she said HPE will look for businesses that fit well with the company’s current offerings.
“Is it a complementary technology that leverages our distribution system,” she said, “and have we bought it right?”
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