Since Hewlett Packard Enterprise Co.’s (HPE) split from its PC and printing arm HP Inc. (HPQ) in November 2015, both firms have undergone restructurings in order to reinvent themselves. For HP Inc., this meant a refocus and reinvestment in core businesses despite declining PC and printing market demand. As for HPE, with Chief Executive Meg Whitman at the lead, the firm has divested two large segments of its businesses, slimming down operations at the enterprise technology group.

Earlier this year, HPE announced plans to spinoff its enterprise IT group to merge with Computer Sciences Corp (CSC). In September, HPE did the same with its software business in a deal with British firm Micro Focus for $8.8 billion. In the firm’s most recent earnings call, Whitman said the company was focusing on “winning in key growth areas in the traditional data center like big data analytics, high performance compute, all-flash storage and networking.” (See also: HPE Sees Growth in HPC Market.)

HPE Could Shed Servers, Storage, IT Support

Credit Suisse analyst Kulbinder Garcha indicates that HPE may look to divest further, with possible sales of its servers, storage, IT support, and consulting arms, reports The Street. Garcha says HPE’s server business, valued at approximately $8.9 billion, could interest Chinese telecomm giant Huawei Technologies. Credit Suisse analysts project the server segment to generate revenues of $15.4 billion in fiscal year 2017 and $1 billion in EBITDA.

Garcha suggests HPE’s storage business, which Credit Suisse expects to bring in $600 million in revenues in fiscal 2017, to receive interest from Beijing-based Lenovo. The investment firm values the tech company’s storage business at an approximate $8 billion. The Palo Alto, Calif.-based tech firm’s technology services unit, comprised of IT support and consulting, could be a candidate for a leveraged buyout with a value of $7.4 billion, indicates Garcha.

Projecting What Remains

Credit Suisse also notes that HPE could look to shed its stake in Chinese data networking firm H3C Technologies, either through a sale or an IPO. HPE sold 51% of its stake in the company to Tsinghua Holdings in a deal worth $2.3 billion last year, with its current stake in the joint venture valued by Credit Suisse at $2.2 billion.

What would remain of HPE after Credit Suisse’s suggested divestitures would be the firm’s core switching and Aruba Networks division. (See also: HPE’s Growth Strategy into Fiscal 2017.)

 

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