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HPE CEO on Q4 earnings: ‘We exited the year with strong momentum’ across all businesses

Antonio Neri - Hewlett Packard Enterprise President & CEO joins Yahoo Finance Live to weigh in on the company's strong Q4 earnings report and discuss what the cloud computing market will look like in years to come.

Video Transcript

- Hewlett Packard Enterprise surprised a few folks on Wall Street this week as sales in the most recent quarter climbed back to pre-pandemic levels. Let's bring in CEO Antonio Neri for a chat on this one. Always good to speak with you, Antonio. How surprised were you to see your sales go back to pre-pandemic levels? Not a lot of companies out there are out there saying that right now.

ANTONIO NERI: Good morning, Brian. Thanks for having me today. We were not surprised because we have been signaling that we had all the momentum throughout the year, particularly after the trough in Q2, and we had the backlog that we were working through.

And we finished year very strong. You know, to your point, we finished the year at pre-pandemic levels of revenue, 7.2%. We have seen signs of stabilization of the core. And we see tremendous growth in the areas where we doubled down, like Intelligent Edge, which was up 5% year over year, and high performance computing, which was up 25% year over year.

And then the pivot was the service, which is a long-term [INAUDIBLE] strategy to become a consumption-driven company continues a strong momentum, where our AIR was up 30% year over year. But most importantly, we exit the year with strong momentum in our [? folders ?] across all businesses. So no surprise at all, I would say.

- You noted stabilization in the core business. Where are you seeing that stabilization? And does that surprise you a little bit? Because from all indications, the economy has slowed down compared to the first half of the year.

ANTONIO NERI: You know, I was listening to Don before I came live. And I agree with him. You know, the digital transformation is accelerated. It's no longer just a priority. It's an imperative for all enterprises and mid companies. So what that means is that you need to modernize. You need to accelerate your efforts to bring cloud technologies for all your apps and data, wherever they live. And the fact of the matter is data is exploding.

So what we have seen, Brian, is an increased demand of solutions that drive IT resiliency. Anything that has to do to bring cloud everywhere is increasing. Obviously, the first step to drive digital transformation is to provide connectivity to users, devices, and things, and then AI, machine learning, obviously, is exploding.

So for us, it's about pivoting our portfolio to where the demand is, and this is where we introduce a new set of HP GreenLake cloud services around virtualization, containerisation, data protection services, anything that's MLOPs driven. And we see strong demand. We see some demand in those areas.

- Is the macro environment, Antonio, globally, is it where it needs to be so that you, as a company, can go beyond pre-pandemic levels over the next few months in terms of sales?

ANTONIO NERI: Yeah, I think we have seen the signs of stabilization. There is still, obviously, a good deal of uncertainty out there. And with the resurgence of cases, obviously people are assessing what that means for them. But I have to say, Brian, enterprises and companies all across every segment are getting used to operating in this new environment. We hope, obviously, with a vaccine and the distribution of it starting early next year, we're going to see even further improvement. But at this point in time, I will say demand seems steady, steady, which has been in the last three or four months. And people are used to operating in this new world.

- Speaking of new world, you made a decision this week to move your headquarters out of San Jose to, I believe, Houston, Texas. Now HP is seen as the godfather of Silicon Valley. Why did you make that move and what are you hoping to achieve?

ANTONIO NERI: Well, let me start by saying we are incredibly committed to Silicon Valley. We have our center of innovation there, and that will continue to be the case. So what we're doing, Brian, is actually creating two major strategic hubs for ourselves. One is a technological hub in San Jose in the new state of the art site that I opened earlier in 2019, and consolidating our entire Silicon Valley footprint into that site. That site will house now the Intelligent Edge business, our storage business, our software business, and any other technical driven capability we have in the Valley.

And then in Houston, which is today our second largest site around the globe and the largest US hub in America, we are actually consolidating all our global functions plus all the technical aspects. And because we were already building another state of the art site, which is almost three times as big as the San Jose site, we decided to move the headquarters into the site.

And the reason is because Houston is the most diverse city in the United States, has phenomenal education system. And the ability to attract and retain talent is easier in many ways. So in the end, we end up with the best of both worlds. But our technology innovation hub still the Silicon Valley. And yet we get the best of both worlds by having both sides with the best technology embedded into those sites.

- Antonio, you're among the first group of CEOs to write an open letter to President-elect Biden on really saying, we want to work with you. Please give us a ring. Has the President-elect-- have you talked to him yet? And besides a vaccine, how important is it that he enacts an infrastructure plan to rebuild the economy?

ANTONIO NERI: Well, we have worked with every administration in the United States. That has been our approach since the beginning. I decided to reach out to President-elect Biden to make sure he understands that we are here to help in any way, shape, or form. I have not spoken to President-elect myself, but our teams, our [INAUDIBLE] team is talking to the transition team. And the transition team is eager to know more about what we are doing to help the current administration and potentially future administration on accelerating the deployment of the vaccine, and what we have done, actually, to enable research and health care to find the cure to this disease.

And as you recall, right at the beginning of the pandemic, I made available our teams, our technology, and all our patents to the research community to find cures for the disease. So the team, the transition team wants to know more about what we have done and what else is available, and most importantly, how we are going to drive this distribution of the vaccine.

So we are here to help. It is time to get behind, rally behind that the country and start enacting policies as well as everything we can as a private sector to get going and drive the recovery, which all our communities sorely need.

- Good to see these discussions happening for sure. We'll leave it there. HP CEO Antonio Neri, always good to speak with you. Have a good weekend.

ANTONIO NERI: Thank you, Brian.