Hewlett Packard Enterprise is spinning out its enterprise services unit and merging the business with Computer Sciences (CSC) in an $8.5 billion transaction. It is also breaking off its software operations and selling the unit to Micro Focus International in an $8.8 billion transaction.
There still may be more to cut, according to Credit Suisse analyst Kulbinder Garcha. Hewlett Packard Enterprise could part with its servers, storage, IT support and consulting, and a Chinese JV could be divested.
Hewlett Packard Enterprise deferred to the company's November earnings call, when Whitman told investors the business would be well positioned after the transactions with CSC and Micro Focus. "Looking forward, the HPE that emerges after the two spin mergers will have a clear vision, the right assets, and direct line of sight to significant market opportunities," she said.
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Hewlett Packard Enterprise's server business, which Garcha values at $8.9 billion, could interest Huawei. The unit has $15.4 billion in projected fiscal year 2017 sales and $1 billion in Ebitda, Credit Suisse estimates.
The storage business, which Credit Suisse expects to generate $600 million in fiscal year 2017 Ebitda from $4 billion in sales, could attract Lenovo. The analyst values the business at nearly $8 billion.
Beijing-based Lenovo has frequently picked up large, unwanted units from large tech groups, buying the Motorola Mobility smartphone business from Alphabet's (GOOGL - Get Report) Google for $2.9 billion; IBM's (IBM - Get Report) low-power service business for $2 billion and big blues PC business for $1.75 billion.
Hewlett Packard Enterprise's technology services unit, which provides IT support and consulting, could be a candidate for a leveraged buyout. Credit Suisse values the business at $7.4 billion.
Meanwhile, Garcha suggests that Hewlett Packard Enterprise could divest its stake in Chinese data networking outfit H3C Technologies, either through a sale to another party or an IPO. HPE sold a 51% stake to in the business to Tsinghua Holdings for $2.3 billion last year. The analyst values the positon in the JV at $2.2 billion.
The core of the remaining business would be the switching and Aruba Networks division.