Hewlett Packard Enterprise is moving headquarters to Texas from Silicon Valley
Hewlett Packard Enterprise Co., one of the founding companies of Silicon Valley, plans to relocate its headquarters to Houston from San Jose after years of waning technology industry dominance that came with the rise of newer businesses focused on mobile and internet-based computing.
The company — which makes servers, storage hardware and networking gear — said Tuesday that it is already building a “state of the art” campus in Houston, the fourth-largest U.S. city. HPE also reported quarterly revenue that topped analysts’ predictions, suggesting that businesses are upgrading their data center hardware during the COVID-19 pandemic.
The company will keep its technology innovation hub in San Jose, at a relatively new building, Chief Executive Antonio Neri said on a conference call with analysts. Administrative work will be centered at the new Texas headquarters. Consolidating more expensive facilities in California will lead to real estate cost savings, he said.
HPE was created in the 2015 split of one of the consummate Bay Area technology companies, Hewlett-Packard Co., which was founded in 1939 in a Palo Alto garage. The move to Texas comes amid a broader reevaluation — motivated by pandemic-enforced work-from-anywhere arrangements — by individuals and companies opting to leave a region known for its high cost of living and difficult commutes.
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Neri has been working to turn around HPE, which had reported declining revenue in all but one quarter since
the 2015 split that also created personal computer maker HP Inc. Neri is reducing the company’s overhead costs, exiting unprofitable businesses and chasing the hybrid-cloud market, in which businesses store and process some of their information in corporate data centers and some with public cloud companies.
No staff reductions are associated with the move, HPE said in a statement. The company has locations in several cities in Texas, including Austin and Plano, and has more than 2,600 workers in Houston, according to a statement from the office of Texas Gov. Greg Abbott.
Sales in the quarter that ended Oct. 31 were little changed from a year earlier at $7.2 billion, HPE reported Tuesday. Analysts on average had estimated $6.9 billion, according to data compiled by Bloomberg. Profit, excluding some items, was 37 cents a share in the quarter, the company said. Analysts had projected 34 cents.
The spread of COVID-19 and the economic slowdown it triggered had suppressed demand for networking and computer hardware and services. Now that companies have settled into remote work for many employees, they’re investing in gear to make that more efficient.
“The global pandemic has forced businesses to rethink everything from remote work and collaboration to business continuity and data insight,” Neri said in the statement. “We saw a notable rebound in our overall revenue, with particular acceleration in key growth areas of our business.”
Fiscal fourth-quarter sales increased 6% from the third quarter. In the current quarter, HPE projected that profit, excluding some items, will be 40 to 44 cents a share. That compares with an average analyst prediction of 35 cents, according to data compiled by Bloomberg. The company said sales will decline from the preceding period at a percentage in the mid-single digits, in line with normal seasonal patterns. A decline of 5% would indicate sales of about $6.84 billion. That compares with an average analyst estimate of $6.63 billion.
HPE shares were little changed in after-hours trading after closing at $11.20. They have declined 29% this year.