HP to Invest $1 Billion to Launch New Era of Enterprise Services
PALO ALTO, Calif. -- HP today announced that it would invest $1 billion in the next generation of its Enterprise Services business.
The transformation, to be built on HP’s market-leading technology and software, will benefit clients through new offerings and improved service delivery.
HP will invest in fully automated, standardized, state-of-the-art commercial data centers built on its Converged Infrastructure and operated by its industry-leading management software. Leveraging its experience from its own IT transformation, HP will enable clients to migrate their applications to these modernized infrastructure platforms, allowing them to run their businesses faster and more efficiently.
“Over the past 20 months, we focused on integrating EDS and improving profitability,” said Tom Iannotti, senior vice president and general manager, HP Enterprise Services. “Now that the integration is largely complete, we have identified significant opportunities to grow and scale the business. These next-generation services will enable our clients to benefit from the combined technology and services leadership that only HP offers.”
This initiative is designed to enhance the client experience and better position Enterprise Services for growth. HP will consolidate Enterprise Services’ commercial data centers, management platforms, networks, tools and applications to create a more scalable, modernized and automated IT infrastructure that will better serve its clients’ needs. As a result of productivity gains and automation, HP expects to eliminate roughly 9,000 positions over a multiyear period to reinvest for further growth and to increase shareholder value.
To fund this investment, HP will take a charge of approximately $1 billion over a multiyear period that will be included in its GAAP financial results. Once completed, this transformation is expected to generate annualized gross savings of approximately $1 billion and net savings after reinvestment in a range between $500 million and $700 million.
HP will conduct an audio webcast for financial analysts and stockholders to discuss the Enterprise Services transformation today at 8:30 a.m. ET/5:30 a.m. PT. This meeting will be hosted by Ann Livermore, executive vice president, Enterprise Business, and Cathie Lesjak, executive vice president and chief financial officer. Access the live audio webcast at www.hp.com/investor/ESWebcast.
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This document contains forward-looking statements that involve risks, uncertainties and assumptions. If such risks or uncertainties materialize or such assumptions prove incorrect, the results of HP and its consolidated subsidiaries could differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including the expected benefits and costs of the transformation of the Enterprise Services business; management plans relating to the transformation and the operation of the Enterprise Services business during and after the completion of the transformation; the expected timing of the completion of the transformation; the ability to complete the transformation considering the various risks and uncertainties associated with its execution; any other statements of the plans, strategies and objectives of management for future operations; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. Risks, uncertainties and assumptions include the possibility that the expected benefits of the transformation may not materialize as expected; that the transformation may not be timely completed, if at all; that, prior to the completion of the transformation, the Enterprise Services business may not perform as expected due to transformation-related uncertainty or other factors; that HP is unable to successfully execute on the transformation; and other risks that are described in HP’s Securities and Exchange Commission reports, including but not limited to the risks described in HP’s Annual Report on Form 10-K for its fiscal year ended October 31, 2009 and Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2010. HP assumes no obligation and does not intend to update these forward-looking statements.
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