01—Abstract
Summary
Summary of the 10-K filed December 15, 2016. Cited figures are marked; the original filing is the authoritative source.
Hewlett Packard Enterprise Company (HPE) filed its 2016 10-K report on December 15, 2016, detailing its operations and financial performance for the fiscal year ended October 31, 2016.
The company underwent a significant separation from its former parent, HP Inc., on November 1, 2015, operating as an independent entity thereafter. A key strategic focus for HPE during this period was the planned separation and merger of its Enterprise Services (ES) business with Computer Sciences Corporation (CSC) and its Software segment with Micro Focus International plc. These transactions were expected to deliver substantial value to shareholders and reshape HPE's operational focus.
The report also highlights HPE's diverse business segments: Enterprise Group (EG), Enterprise Services (ES), Software, Financial Services (FS), and Corporate Investments, detailing their respective revenue contributions and operational performance. Investors should note the company's ongoing efforts to navigate market shifts towards cloud computing and evolving IT consumption models, alongside intense competition. The report provides insights into the company's financial health, liquidity, and risk factors, including those related to its strategic divestitures and the broader macroeconomic environment.
02—Key points
Key Highlights
- HPE completed its separation from HP Inc. on November 1, 2015, becoming an independent, publicly traded company.
- Plans were announced for the spin-off and merger of the Enterprise Services (ES) business with Computer Sciences Corporation (CSC), expected to deliver approximately $8.5 billion to shareholders.
- Plans were also announced for the spin-off and merger of the Software segment with Micro Focus International plc, expected to deliver approximately $8.8 billion to shareholders.
- Net revenue for fiscal year 2016 was $50.1 billion, a decrease of 3.8% compared to fiscal year 2015, primarily due to unfavorable currency fluctuations and divestitures.
- Gross margin improved slightly to 29.2% in fiscal year 2016 from 28.7% in fiscal year 2015, driven by service delivery efficiencies.
- Operating margin saw a significant increase of 5.4 percentage points in fiscal year 2016, largely due to gains from divestitures.
- The company held approximately $13.0 billion in cash and cash equivalents and investments as of October 31, 2016, an increase from the previous year.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2016, Hewlett Packard Enterprise Co kept $0.10.
- Revenue$30.28B100.0%
- Cost of revenue−$13.04B43.1%
- Gross profit$17.24B56.9%
- Operating costs−$13.34B44.0%
- Operating income$3.90B12.9%
- Interest, other & tax−$742.0M2.5%
- Net income$3.16B10.4%
Where FY2016 revenue went
$30.28B- Cost of revenue: $13.04B, 43% of revenue
- Other operating costs: $6.24B, 21% of revenue
- SG&A: $5.38B, 18% of revenue
- Net income: $3.16B, 10% of revenue
- R&D: $1.71B, 5.7% of revenue
- Interest, other & tax: $742.0M, 2.5% of revenue
Kept 10% as net incomeNet income $3.16B · 10%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2016filed December 15, 2016Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $30.28B$31.08B | −2.6% |
| Cost of Revenue | $13.04B$13.29B | −1.9% |
| Gross Profit | $17.24B$17.78B | −3.1% |
| R&D Expenses | $1.71B$1.68B | +2.3% |
| SG&A Expenses | $5.38B$5.14B | +4.6% |
| Operating Expenses | $26.38B$29.13B | −9.5% |
| Operating Income | $3.90B$1.95B | +100.6% |
| Interest Expense | $547.00M$249.00M | +119.7% |
| Net Income | $3.16B$2.46B | +28.4% |
| EPS (Basic) | $1.84$1.36 | +35.3% |
| EPS (Diluted) | $1.82$1.34 | +35.8% |
| Shares Outstanding (Basic) | 1.72B1.80B | −4.9% |
| Shares Outstanding (Diluted) | 1.74B1.83B | −5.2% |
05—Questions
Frequently Asked Questions
What were the major strategic initiatives announced by HPE during fiscal year 2016?
During fiscal year 2016, HPE announced two significant strategic transactions: the planned spin-off and merger of its Enterprise Services business with Computer Sciences Corporation (CSC), and the spin-off and merger of its Software segment with Micro Focus International plc. These transactions were aimed at creating more focused businesses and delivering value to shareholders.
How did HPE's net revenue perform in fiscal year 2016?
HPE's net revenue for fiscal year 2016 was $50.1 billion, a decrease of 3.8% compared to fiscal year 2015. This decline was attributed to unfavorable currency fluctuations, revenue runoff in key accounts within Enterprise Services, the impact of divestitures, and a decline in Software revenue.
What is the status of HPE's major divestitures?
The company announced plans to spin-off and merge its Enterprise Services business with CSC, targeting completion around April 1, 2017, and its Software segment with Micro Focus, targeting completion by August 31, 2017. These transactions were subject to customary closing conditions, including shareholder approvals and regulatory clearances.
How did HPE's profitability change in fiscal year 2016?
HPE's gross margin improved slightly to 29.2% in fiscal year 2016, driven by service delivery efficiencies. Operating margin saw a significant increase of 5.4 percentage points, largely due to gains recognized from the divestitures of H3C and MphasiS. Net earnings increased to $3.16 billion from $2.46 billion in fiscal year 2015.
06—Continue