Equity Method Investments

3 Months Ended

Jan. 31, 2017

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments

Equity Method Investments

The Company includes investments which are accounted for using the equity method, under Investments in equity interests on the Company's Condensed Consolidated Balance Sheets. As of January 31, 2017, the Company's Investments in equity interests primarily included $2.6 billion related to a 49% interest in H3C.

Investment in H3C

In May 2016, Tsinghua Holdings’ subsidiary, Unisplendour Corporation, purchased 51% of the new business named H3C, comprising Hewlett Packard Enterprise’s former H3C Technologies and China-based servers, storage and technology services business which were previously reported within the EG segment. The Company retained a 49% interest in the new company, which it records as an equity method investment.

During the three months ended January 31, 2017, the Company recorded a Loss from equity interests of $22 million in the Condensed Consolidated Statement of Earnings, $35 million of which represented basis difference amortization and $13 million primarily represented the Company's share of H3C's net income. This loss was reflected as a reduction in the carrying amount of Investments in equity interests in the Condensed Consolidated Balance Sheet as of January 31, 2017.

The Company also has commercial arrangements with H3C to buy and sell HPE branded servers, storage and technology

services. During the three months ended January 31, 2017, HPE recorded approximately $260 million in sales to H3C, $91 million in purchases from H3C and $81 million in net payables due to H3C.