Hewlett Packard Enterprise Completes Spin-off and Merger of its Enterprise Services Business with CSC

Hewlett Packard Enterprise (HPE) announced that it has successfully completed the previously announced separation of its Enterprise Services business (ES or Everett Spinco), and merged it with Computer Sciences Corporation (CSC) to create DXC Technology (DXC).

The spin-merge of the ES business is intended to unlock a stronger, more focused HPE, well positioned to compete and win in today’s rapidly changing market.

HPE is now setting out to execute a clear and ambitious strategy based on three key pillars: First, making hybrid IT simple through secure, software-defined offerings that enable customers to move data seamlessly across their traditional data centers as well as private and public cloud environments.  Second, redefining IT outside of the data center by powering the emerging intelligent edge that will run campus, branch, and Industrial IoT applications.  Third, providing world-class expertise and flexible consumption models to help customers transform their IT environments.

Services Remains Core to HPE’s Strategy
HPE will retain and continue to invest in Pointnext, its technology services organization that draws on the expertise of more than 25,000 specialists in 80 countries to support customers across Advisory and Transformation Services, Professional Services, and Operational Services.  These teams collaborate with businesses worldwide to speed their adoption of emerging technologies, including cloud computing and hybrid IT, big data and analytics, the Intelligent Edge and Internet of Things (IoT).

HPE will also maintain a strong relationship with DXC, with agreements in place to support current customers and to grow business over time.  In addition, HPE plans to build valuable new partnerships with other leading IT services companies.

The transaction is expected to deliver approximately $13.5 billion in value to HPE on an after-tax basis.  This includes an equity stake in DXC for HPE’s shareholders, a cash dividend payment to HPE, and DXC’s assumption of debt and other liabilities.

HPE Adjusts Outlook to Remove ES Financials
As a result of the successful separation of its Enterprise Services business, HPE is adjusting its financial outlook to reflect the partial-year contribution from ES, since ES will no longer contribute to HPE financials going forward.  Accordingly, HPE is adjusting its fiscal 2017 second quarter and full year outlook in connection with the announcement. 

Keywords: Industrial IoT, Hybrid IT, Cloud Computing, Big Data, Analytics, Intelligent Edge, ARC Advisory Group.