Antonio Neri's Five Boldest Statements From HPE’s Annual Meeting

Antonio Neri. Photo by Eric Draper

Meeting Financial Commitments

Hewlett Packard Enterprise CEO Antonio Neri says the company is not getting its due for meeting its financial commitments, driving robust growth in the intelligent edge business, and even strong performance in hybrid IT.

"I don't think we are getting full credit for our execution as a whole," said Neri in a question and answer session during HPE's annual shareholder meeting on Wednesday. "When I think about the growth we drove last year: 13 percent growth in intelligent edge; six percent growth in our core business which is a mature business- $24 billion of our portfolio; and then all the expansion in profit and non GAAP EPS (earnings per share). I don't think we got the full credit of the full execution of the business."

In fiscal 2018, HPE reported non-GAAP diluted net earnings per share of $1.56, up 63 percent from the prior year on sales growth of seven pecent to $30.9 billion.

"We exceeded our 2018 financial targets we set at the Securities Analyst Meeting in 2017 for revenue growth, non-GAAP operating profit, which was up 26 percent and non-GAAP earnings per share, up 63 percent versus the prior year," said Neri. "We did all this while returning $4 billion to shareholders."

Neri said that HPE continues to see "momentum" in the fiscal 2019 with a strong first quarter. "We are committed to continuing to execute and deliver on our commitments," he said. "We are actually very confident that ultimately will drive the shareholder value. Every quarter we have been delivering on our promises."

HPE's share price grew at twice the rate of the S&P 500 market index last year, said Neri.

HPE shares closed Wednesday up three cents to $15.85.

Accelerating The Intelligent Edge

Our strategy has been clear: which is to accelerate the intelligent edge opportunity. We believe the edge is the next frontier. That is why we are so bullish about our Aruba portfolio with the connectivity, security and analytics. Ultimately we believe the cloud is going to get closer and closer to where the data is generated. That is an opportunity for us with edge computing as well.

I don't think we are getting full credit for our execution as a whole. When I think about growth we drove last year: 13 percent growth in intelligent edge; six percent growth in our core business which is a mature business- $24 billion of our portfolio; and then all the expansion in profit and non GAAP EPS. I don't think we got the full credit of the full execution of the business. When I think about the long term growth opportunity definitely the edge is the big long term opportunity, while we continue to pivot that core business- optimizing solutions for each specific workload delivered as a service.

We feel very good about our ability to execute because we have proven in the last five quarters we can deliver against our promises.

Global Economic Issues And Competition

Obviously we are monitoring the macro economic environment with what is happening around the globe with global trade, China, Europe, Brexit. There are a few things happening there.

Our business is very diversified. We saw significant growth in Europe in addition to Asia which is very good. That diversification gives us the ability to deal with some of these challenges.

Obviously the competition is heating up. There is no question about it. Also we went through a year in which there was a lot of transition in supply, demand and cost. Last year we experienced significant growth in cost because of the availability of memory and flash. Those are the challenges we manage every single day- how we think about the future, how we do procurement, how we position inventory, how we do pricing- obviously against the competition.

The other thing obviously is to continue to be more efficient in everything we do. That is why we launched HPE Next which is ultimately rearchitecting the company from the ground up. Actually we are ahead of what we committed in 2017 to you as shareholders to return $800 million (in net cost savings on a run rate basis) back to shareholders. We feel pretty good about it but obviously we have to continue to monitor the macro economic environment and then continue to be very efficient in everything we do in each segment of the business. So far we are executing against that.

Attracting And Retaining Talent

Attracting, developing and retaining talent is probably the biggest challenge in this industry. Obviously this is an industry moving at lightning speed. It is not just the pace of disruption we see from the business standpoint but the pace of innovation changes we see on the technology side. Obviously continuing to pivot the workforce for the skills that we need into the future- making sure we have the right person in the right job at the right time is always a critical success factor. To me that is the biggest area of focus for me which goes at the core of the culture.

In 2018 we had the lowest attrition rate we have had in a long time. We have the highest employee engagement scores and we continue to pivot the workforce into the new skill sets we need. Obviously we need more software defined skillsets. Obviously we think about AI (artificial intelligence), machine learning, services orientation. Those are the things we are really focused on. This is an area I am focused on with the entire executive team.

Software Leadership

Software is increasingly embedded across all of our value solutions and we continue to drive software innovation both through organic investments and acquisitions. For example, HPE OneView is the software foundation that delivers our composable, hybrid-cloud vision. It has over one million licenses in deployment and just won “Software Product of the Year” from one of the leading channel publications (CRN), so it is clearly resonating with our customers and partners.

Another good example is Plexxi, which is now incorporated into the composable fabric of our SimpliVity hyper-converged offering. And, thanks to our AI software from Infosight and more recently, BlueData, we are offering the most intelligent storage platform on the market. This software is what sets our storage portfolio apart and helped drive the seventh straight quarter of growth.

Pay Per Use Market Leadership And Customer Success

Our ability to offer as-a-service consumption models is a key differentiator for HPE. Innovative services like Pointnext Greenlake, which offers a consumption model that lets customers pay for what they use, continue to resonate with customers.

We have recently seen competitors try to compare their offerings to Greenlake, but our solution, which is enabled by software and backed by HPE Financial Services, is the only on-prem consumption-driven offering in the market.

It is clear that our strategy and our portfolio are resonating with customers. For example in Texas, the HPE, Aruba and Partner Ecosystem is bringing the Texmark’s Refinery of the future to the present with our industrial IoT and AI technology. In India, we are working with the State Bank of India so it can extend modern bank services to every citizen. The National Renewable Energy Laboratory (NREL) commissioned HPE to build a new supercomputer. The “Eagle” supercomputer will advance research on energy technologies and uses less energy than NREL’s prior system. It’s 3.5 times more powerful and captures 97 percent of the waste heat it generates.