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  • Since the spin-off from HP, HPE has seemingly been in a constant state of restructuring. So it should come as no surprise that it is doing so once again.
  • Transitioning to an as-a-service (aaS) model makes sense its existing commoditized revenue base, but HPE will face strong competition when it gets where it wants to go.
  • The breadth and overly diversified strategy going forward appears to lack a single well-defined advantage for the company.
  • That said, the Aruba/Sliver Lake combination is a good step forward and given low expectations, the company could surprise to the upside.
  • Meantime, the stock yields 5% and the dividend appears to be secure and easily covered by FCF.

At its recent analyst day presentation, Hewlett Packard Enterprises (HPE) unveiled a strategic plan to pivot to an “edge-to-cloud platform as-a-service” model. The move is yet another restructuring plan in search of a compelling identity since the split from HP was first announced in 2014. Given the pandemic’s impact this year, the stock is trading at the same level it was back in 2015 despite a bull-market in the technology sector. And while the new strategy makes strategic sense, it could take a couple years given the existing revenue base is largely dependent upon commoditized businesses that have relatively low margins.

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