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HPE CEO outlines company's 'three distinct growth engines'

While artificial intelligence has been a significant growth driver for many tech companies, it is not the only pillar for growth in Hewlett Packard Enterprise's (HPE) arsenal. HPE CEO Antonio Neri joins Yahoo Finance Executive Editor Brian Sozzi to discuss how the computer company is leveraging its diverse portfolio to drive growth.

Neri states that the primarily goal is to "always look how [we] can accelerate value for shareholders." Neri states a focus on relevancy and cites “three distinct growth engines” of the company: Intelligent edge, hybrid cloud computing, and AI.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

BRIAN SOZZI: Each time we have talked this year, Antonio, I have come away thinking increasingly that HPE is a really strong play on AI and where AI is going. And I think this conversation just furthers that thought along. As the CEO of HPE, do you look at your portfolio and think maybe there's certain areas we no longer need to play in? And these parts of the business are not where we're going into the future and maybe we shouldn't have them in our portfolio.

ANTONIO NERI: We always. It is my fiduciary duty and the fiduciary duty of our board to always look how we can accelerate value for shareholders. It is a context where invest money where we divest where it makes no sense and ultimately where are we going to grow as I think about 3, 5, 10 years out. And as you and I discussed multiple times, all comes down to relevancy. It's not just financial engineering and that's why a strategy that's innovation driven is the core.

So as I think about our business, we have five businesses, right? The compute business. The traditional server business is very commoditized, but give us scale and honestly give us a lot of free cash flow that we directly contribute back to shareholders or we use to invest in growth engine.

And I see three distinct growth engine for us. One is the Intelligent Edge. And you see the results, which actually created an increment of $2 billion in just 18 months and actually had a massive operating profit. So that to me is the core fabric of the company is the networking layer.

The second is the hybrid cloud. And, you know, as you saw in our 2023 results, we went from very little to $13 billion in total contract value in less than six years. And that's the foundation for which we create the data, manage the data.

And now we can accelerate with the third growth engine which is AI and we have the expertise to do so. But also, we need to allocate capital correctly. And if you think about the results of 2023, we actually delivered record-breaking performance in non-GAAP diluted earnings per share and free cash flow in the history of the company. So we are on the right path, but it is always about that discipline of [INAUDIBLE] return on invested capital.

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