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Segment Information
 3 Months Ended
Jan. 31, 2017
Segment Reporting [Abstract]  
Segment Information
Segment Information
Hewlett Packard Enterprise's operations are organized into five segments for financial reporting purposes: the Enterprise Group ("EG"), Enterprise Services ("ES"), Software, Financial Services ("FS"), and Corporate Investments. Hewlett Packard Enterprise's organizational structure is based on a number of factors that the Chief Operating Decision Maker ("CODM"), Meg Whitman, uses to evaluate, view and run its business operations, which include, but are not limited to, customer base and homogeneity of products and technology. The segments are based on this organizational structure and information reviewed by Hewlett Packard Enterprise's management to evaluate segment results.
A summary description of each segment follows.
The Enterprise Group provides servers, storage, networking, and technology services that, when combined with Hewlett Packard Enterprise's Cloud solutions, enable customers to manage applications across virtual private cloud, private cloud and traditional IT environments. Described below are the business units and capabilities within EG.
•
Servers offers both Industry Standard Servers ("ISS") as well as Mission-Critical Servers ("MCS") to address the full array of the Company's customers' computing needs. ISS provides a range of products, from entry level servers through premium HPE ProLiant servers, which run primarily on Windows, Linux and virtualization platforms from software providers including Microsoft Corporation ("Microsoft") and VMware, Inc. ("VMware") and open sourced software from other major vendors while leveraging x86 processors from Intel Corporation ("Intel") and Advanced Micro Devices ("AMD"). For the most mission-critical workloads, HPE delivers Integrity servers based on the Intel® Itanium® processor, HPE Integrity NonStop solutions and mission critical x86 ProLiant servers.

•
Storage offers Converged Storage solutions and traditional storage. Converged Storage solutions include 3PAR all-flash arrays, StoreServe, StoreOnce, Big Data, StoreVirtual and Software Defined and Cloud Group storage products. Traditional storage includes tape, storage networking and legacy external disk products such as MSA, EVA and XP.

•
Networking offers wireless local area network equipment, mobility and security software, switches, routers, and network management products that span data centers, campus and branch environments and deliver software defined networking and unified communications capabilities.

•
Technology Services creates preferred IT experiences that power a digital business. The Technology Services team and the Company's extensive partner network provide value across the IT life cycle delivering advice, transformation projects, professional services, support services, and operational services for Hybrid IT and at the IT Edge. Technology Services is also a provider of on-premises flexible consumption models that enable IT agility, simplify operations and align costs to business value. Some of the offerings include Data Center Care, Proactive Care, Technology Consulting, Aruba Services, and Communications and Media Solutions ("CMS").

Enterprise Services provides technology consulting, outsourcing and support services across infrastructure, applications and business process domains within traditional and Strategic Enterprise Service offerings that include analytics and data management, security and cloud services. Described below are the business units and capabilities within ES.

•
Infrastructure Technology Outsourcing delivers comprehensive services that encompass the management of data centers, IT security, cloud computing, workplace technology, networks, unified communications and enterprise service management.

•
Application and Business Services helps clients develop, revitalize and manage their applications and information assets and provides end-to-end, industry-specific business process services.
Software provides comprehensive solutions across application testing and delivery management, big data analytics and applications, enterprise security, information management and governance and IT operations management for organizations of varying sizes, from small- to medium- to large-scale enterprises. These software offerings include licenses, support, professional services, and software-as-a-service ("SaaS").
Financial Services provides flexible investment solutions, such as leasing, financing, IT consumption, and utility programs and asset management services, for customers to enable the creation of unique technology deployment models and acquire complete IT solutions, including hardware, software and services from Hewlett Packard Enterprise and others. Providing flexible services and capabilities that support the entire IT life cycle, FS partners with customers globally to help build investment strategies that enhance their business agility and support their business transformation. FS offers a wide selection of investment solution capabilities for large enterprise customers and channel partners, along with an array of financial options to SMBs and educational and governmental entities.
Corporate Investments includes Hewlett Packard Labs and certain cloud-related business incubation projects, among others.
Segment Policy
Hewlett Packard Enterprise derives the results of the business segments directly from its internal management reporting system. The accounting policies that Hewlett Packard Enterprise uses to derive segment results are substantially the same as those the consolidated company uses. The CODM measures the performance of each segment based on several metrics, including earnings from operations. The CODM uses these results, in part, to evaluate the performance of, and to allocate resources to, each of the segments.
Segment revenue includes revenues from sales to external customers and intersegment revenues that reflect transactions between the segments on an arm's-length basis. Intersegment revenues primarily consist of sales of hardware and software that are sourced internally and, in the majority of the cases, are financed as operating leases by FS to our customers. Hewlett Packard Enterprise's consolidated net revenue is derived and reported after the elimination of intersegment revenues from such arrangements.
Hewlett Packard Enterprise periodically engages in intercompany advanced royalty payment and licensing arrangements that may result in advance payments between subsidiaries. Revenues from these intercompany arrangements are deferred and recognized as earned over the term of the arrangement by the Hewlett Packard Enterprise legal entities involved in such transactions; however, these advanced payments are eliminated from revenues as reported by Hewlett Packard Enterprise and its business segments. As disclosed in Note 6, "Taxes on Earnings", Hewlett Packard Enterprise executed intercompany advanced royalty payment arrangements resulting in advanced payments of $439 million during the first quarter of fiscal 2017 and $3.7 billion during fiscal 2016. In these transactions, the payments were received in the U.S. from a foreign consolidated affiliate, with a deferral of intercompany revenues over the term of the arrangements, approximately 5 years. The impact of these intercompany arrangements are eliminated from both Hewlett Packard Enterprise consolidated and segment net revenues.
Financing interest in the Condensed Consolidated Statements of Earnings reflects interest expense on borrowing- and funding-related activities associated with FS and its subsidiaries, and debt issued by Hewlett Packard Enterprise, a portion of the proceeds of which benefited FS.
Hewlett Packard Enterprise does not allocate to its segments certain operating expenses, which it manages at the corporate level. These unallocated costs include separation costs, restructuring charges, stock-based compensation expense, amortization of intangible assets, certain corporate governance costs, acquisition and other related charges, and defined benefit plan settlement charges and remeasurement benefit.
Segment Realignment
Effective at the beginning of the first quarter of fiscal 2017, the Company implemented organizational changes to align its segment financial reporting more closely with its current business structure. These organizational changes resulted in: (i) within the Enterprise Group segment, primarily, the transfer of the big data storage product group previously reported within the Servers business unit to the Storage business unit; the transfer of the Aruba services capabilities previously reported within the Networking business unit to the Technology Services business unit; and (ii) the transfer of the Communications and Media Solutions product group previously reported within the Enterprise Services segment to the Technology Services business unit within the Enterprise Group segment.
The Company reflected these changes to its segment information retrospectively to the earliest period presented, which resulted in: (i) within the Enterprise Group segment, primarily, the transfer of net revenue from the big data storage product group previously reported within the Servers business unit to the Storage business unit; the transfer of net revenue from the Aruba services capabilities previously reported within the Networking business unit to the Technology Services business unit; and (ii) the transfer of net revenue, related eliminations of intersegment revenues and operating profit from the Communications and Media Solutions product group previously reported within the Application and Business Services business unit in the Enterprise Services segment to the Technology Services business unit within the Enterprise Group segment.
The changes within the Enterprise Group segment had no impact on Hewlett Packard Enterprise's previously reported Enterprise Group segment net revenue and earnings from operations. The change between the Enterprise Services and Enterprise Group segments had no impact on Hewlett Packard Enterprise's previously reported consolidated net revenue, earnings from operations, net earnings or net earnings per share.
There have been no material changes to the total assets of Hewlett Packard Enterprise's individual segments since October 31, 2016.

Segment Operating Results
 
Enterprise
Group
 
Enterprise
Services
 
Software
 
Financial
Services
 
Corporate
Investments
 
Total
 
In millions
Three months ended January 31, 2017
 

 
 

 
 

 
 

 
 

 
 

Net revenue
$
6,097

 
$
3,852

 
$
654

 
$
804

 
$
—

 
$
11,407

Intersegment net revenue and other
228

 
185

 
67

 
19

 
—

 
499

Total segment net revenue
$
6,325

 
$
4,037

 
$
721

 
$
823

 
$
—

 
$
11,906

Segment earnings (loss) from operations
$
802

 
$
283

 
$
154

 
$
78

 
$
(43
)
 
$
1,274

Three months ended January 31, 2016
 

 
 

 
 

 
 

 
 

 
 

Net revenue
$
6,882

 
$
4,367

 
$
720

 
$
754

 
$
1

 
$
12,724

Intersegment net revenue and other
300

 
188

 
60

 
22

 
—

 
570

Total segment net revenue
$
7,182

 
$
4,555

 
$
780

 
$
776

 
$
1

 
$
13,294

Segment earnings (loss) from operations
$
964

 
$
218

 
$
136

 
$
100

 
$
(99
)
 
$
1,319


The reconciliation of segment operating results to Hewlett Packard Enterprise condensed consolidated results was as follows:
 
Three Months Ended
January 31,
 
2017
 
2016
 
In millions
Net Revenue:
 

 
 

Total segments
$
11,906

 
$
13,294

Elimination of intersegment net revenue and other
(499
)
 
(570
)
Total Hewlett Packard Enterprise condensed consolidated net revenue
$
11,407

 
$
12,724

Earnings before taxes:
 

 
 

Total segment earnings from operations
$
1,274

 
$
1,319

Corporate and unallocated costs and eliminations
(74
)
 
(125
)
Stock-based compensation expense
(145
)
 
(165
)
Amortization of intangible assets
(101
)
 
(218
)
Restructuring charges
(177
)
 
(311
)
Acquisition and other related charges
(44
)
 
(37
)
Separation costs
(276
)
 
(79
)
Defined benefit plan settlement charges and remeasurement benefit
6

 
—

Interest and other, net
(78
)
 
(80
)
Tax indemnification adjustments
(18
)
 
15

Loss from equity interests
(22
)
 
—

Total Hewlett Packard Enterprise condensed consolidated earnings before taxes
$
345

 
$
319


Net revenue by segment and business unit was as follows:
 
Three Months Ended
January 31,
 
2017
 
2016
 
In millions
Servers
$
3,103

 
$
3,536

Technology Services
1,943

 
1,985

Storage
730

 
837

Networking
549

 
824

Enterprise Group
6,325

 
7,182

Infrastructure Technology Outsourcing
2,637

 
2,874

Application and Business Services
1,400

 
1,681

Enterprise Services
4,037

 
4,555

Software
721

 
780

Financial Services
823

 
776

Corporate Investments
—

 
1

Total segment net revenue
11,906

 
13,294

Elimination of intersegment net revenue and other        
(499
)
 
(570
)
Total Hewlett Packard Enterprise condensed consolidated net revenue
$
11,407

 
$
12,724