CEO Neri Expects HPE to Start Recouping $4 Billion Edge Investment in Two Years

Nico Grant (Bloomberg) -- Hewlett Packard Enterprise will begin to reap returns from its largest current investment before the end of a four-year commitment, Chief Executive Officer Antonio Neri said.

Palo Alto, California-based HPE committed $4 billion through 2022 to the Intelligent Edge, a patchwork of initiatives meant to accelerate the company’s artificial intelligence, internet of things and distributed computing offerings. Neri has linked the business to HPE’s relatively fast-growing networking arm, Aruba Networks, as one way to diversify the company from a server market that’s cyclical and a storage hardware market that’s shown signs of stagnation.

“We will see a return on that investment over the next two years,” Neri said Monday in a taped interview with Bloomberg Television. “This is a business that’s really growing fast. In fact, we’re growing the business double digits.”

At a conference in Madrid Monday, HPE also announced Composable Cloud, a hybrid platform that will use AI software to allow customers to connect data on HPE hardware with data stored in public clouds from Amazon, Microsoft and others. “Cloud is not a destination,” Neri said. “It is an experience and we need to compose our cloud to the specific workloads.”

After missing out on cloud computing services that are driving growth in information technology, the Intelligent Edge is HPE’s last best hope to power sales through the next decade. What the company won’t be doing is buying revenue through mergers and acquisitions, Neri said. Rather it will seek deals for intellectual property and talent.

Despite a ripple of consolidation among software companies this year, Neri said he views the high tech valuations as limiting M&A among hardware companies.

“Valuations have to make sense, and at this point, I think valuations are a little high,” he said. “That’s why we see a little bit of correction going on in the market. At this point in time, our focus is really on execution.”