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.