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Segment Information
 12 Months Ended
Oct. 31, 2019
Segment Reporting [Abstract]  
Segment Information Segment Information
Hewlett Packard Enterprise's operations are organized into four segments for financial reporting purposes: Hybrid IT, Intelligent Edge, 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"), who is the Chief Executive Officer ("CEO"), uses to evaluate, view and run 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.
Hybrid IT provides a broad portfolio of services-led and software-enabled infrastructure and solutions including secure, software-defined servers and storage, and HPE Pointnext services, thereby combining HPE's hardware, software and services capabilities to make Hybrid IT simple for its customers. Described below are the business unit capabilities within Hybrid IT.
•
Hybrid IT Product includes Compute and Storage
◦
Compute HPE offers both Industry Standard Servers ("ISS"), which are general purpose servers for multi-workload computing, as well as Mission Critical Servers ("MCS"), which are servers optimized for particular workloads. HPE's general purpose servers include the HPE ProLiant, secure and versatile rack and tower servers; HPE BladeSystem, a modular infrastructure that converges server, storage and networking; and HPE Synergy, a composable infrastructure for traditional and cloud-native applications. The Company's workload optimized server portfolio includes the HPE Apollo, and products from the acquisition of Cray, for high performance computing and artificial intelligence, HPE Cloudline for cloud data centers, HPE Edgeline for computing at the network edge and HPE Integrity for mission-critical applications.
Storage. With storage offerings that are AI-driven and built for cloud environments with as-a-service consumption and flexible investment options, HPE provides the right workload optimized destinations for data. Powered by HPE InfoSight advanced analytics and machine learning and HPE Cloud Volumes data mobility, HPE delivers intelligent storage for hybrid cloud environments so that customers can unlock data’s full potential and derive business insights. Key solutions include HPE SimpliVity, a hyper-converged platform for virtualization, Blue Data and MapR for expertise in artificial intelligence, machine learning and analytics data management, HPE
3PAR Storage and HPE Nimble Storage all-flash arrays for mission critical workloads and general purpose workloads, respectively, and big data solutions running on HPE Apollo Servers. Storage also provides comprehensive data protection with HPE StoreOnce and HPE Recovery Manager Central, solutions for secondary workloads and traditional tape, storage networking and disk products, such as HPE MSA and HPE XP.
•
HPE Pointnext Services creates preferred IT experiences that power the digital business. The HPE Pointnext 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 the Intelligent Edge. HPE Pointnext Services is also a provider of on-premises flexible consumption models, such as HPE GreenLake, that enable IT agility, simplify operations and align cost to business value. HPE Pointnext Service offerings includes Operational Services and Advisory and Professional Services.
The Intelligent Edge business is comprised of a portfolio of secure Edge-to-Cloud solutions operating under the Aruba brand that include wireless LAN, campus and data center switching, software-defined wide-area-networking, security and associated services to enable secure connectivity for businesses of any size. The primary business drivers for Intelligent Edge solutions are mobility and the Internet of Things ("IoT").
◦
HPE Aruba Product includes wired and wireless local area network, wide area network, data center networking such as Wi-Fi access points, switches, routers, sensors, and software products that include cloud-based management, network management, network access control, analytics and assurance, and location services.
◦
HPE Aruba Services includes professional and support services, as well as as-a-service (aaS) and consumption models for the Intelligent Edge portfolio of products.
        Financial Services provides flexible investment solutions, such as leasing, financing, IT consumption, and utility programs and asset management services, for customers that facilitate unique technology deployment models and the acquisition of complete IT solutions, including hardware, software and services from Hewlett Packard Enterprise and others. In order to provide 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 Communications and Media Solutions ("CMS"), Hewlett Packard Labs, and certain business incubation projects.
Segment Policy
Hewlett Packard Enterprise derives the results of its 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.
Financing interest in the Consolidated Statements of Earnings reflects interest expense on borrowing and funding-related activity associated with FS and its subsidiaries, and debt issued by Hewlett Packard Enterprise for which a portion of the proceeds 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 certain corporate costs and eliminations, stock-based compensation expense related to corporate and certain global functions, amortization of intangible assets, impairment of goodwill, restructuring charges, transformation costs, disaster (recoveries) charges, acquisition, disposition and other related charges, separation costs, defined benefit plan remeasurement benefit.
Segment Organizational Changes
Effective at the beginning of the first quarter of fiscal 2019, the Company implemented organizational changes to align its segment financial reporting more closely with its current business structure. These organizational changes primarily include: (i) the transfer of the data center networking ("DC Networking") business, which was previously reported within the Hybrid IT Product business unit in the Hybrid IT segment, to the HPE Aruba Product and HPE Aruba Services business units within the Intelligent Edge segment; (ii) the transfer of the edge compute business, which was previously reported within the HPE Aruba Product business unit in the Intelligent Edge segment, to the Hybrid IT Product business unit within the Hybrid IT segment; and (iii) the transfer of the CMS business, which was previously reported within the HPE Pointnext business unit in the Hybrid IT segment, to the Corporate Investments segment.
The Company reflected these changes to its segment information retrospectively to the earliest period presented, which primarily resulted in the transfer of net revenue and operating profit for each of the businesses as described above.
These changes had no impact on Hewlett Packard Enterprise's previously reported consolidated GAAP net earnings or GAAP net earnings per share ("EPS").
Effective November 1, 2019, the Company will report the following four new reportable segments: Compute; High Performance Compute ("HPC") & Mission Critical Servers ("MCS"); Storage, and Advisory & Professional Services ("A&PS"). As a result of this change, Operational Services, which was previously reported within HPE Pointnext Services, will be reported within each of the related individual new segments. The Intelligent Edge, Financial Services and Corporate Investments segments will remain largely unchanged.
Segment Operating Results
 
Hybrid IT
 
Intelligent Edge
 
Financial Services
 
Corporate Investments
 
Total
 
In millions
2019
 

 
 

 
 

 
 

 
 
Net revenue
$
22,230

 
$
2,828

 
$
3,570

 
$
507

 
$
29,135

Intersegment net revenue
595

 
9

 
11

 
—

 
615

Total segment net revenue
$
22,825

 
$
2,837

 
$
3,581

 
$
507

 
$
29,750

Segment earnings (loss) from operations
$
2,804

 
$
95

 
$
305

 
$
(108
)
 
$
3,096

2018
 

 
 

 
 

 
 

 
 
Net revenue
$
23,750

 
$
2,903

 
$
3,656

 
$
543

 
$
30,852

Intersegment net revenue
748

 
17

 
15

 
—

 
780

Total segment net revenue
$
24,498

 
$
2,920

 
$
3,671

 
$
543

 
$
31,632

Segment earnings (loss) from operations
$
2,503

 
$
277

 
$
286

 
$
(91
)
 
$
2,975

2017
 

 
 

 
 

 
 

 
 
Net revenue
$
22,063

 
$
2,680

 
$
3,574

 
$
554

 
$
28,871

Intersegment net revenue(1)
876

 
42

 
28

 
(1
)
 
945

Total segment net revenue
$
22,939

 
$
2,722

 
$
3,602

 
$
553

 
$
29,816

Segment earnings (loss) from operations
$
2,183

 
$
291

 
$
301

 
$
(91
)
 
$
2,684


 
(1)
For the periods prior to the Everett and Seattle Transactions presented above, the amounts include the elimination of pre-separation intercompany sales to the former ES and Software segments, which are included within Net loss from discontinued operations in the Consolidated Statements of Earnings.

The reconciliation of segment operating results to Hewlett Packard Enterprise consolidated results was as follows:
 
For the fiscal years ended October 31,
 
2019
 
2018
 
2017
 
In millions
Net Revenue:
 

 
 

 
 

Total segments
$
29,750

 
$
31,632

 
$
29,816

Elimination of intersegment net revenue
(615
)
 
(780
)
 
(945
)
Total Hewlett Packard Enterprise consolidated net revenue
$
29,135

 
$
30,852

 
$
28,871

Earnings before taxes:(1)
 

 
 

 
 

Total segment earnings from operations
$
3,096

 
$
2,975

 
$
2,684

Unallocated corporate costs and eliminations
(286
)
 
(259
)
 
(407
)
Unallocated stock-based compensation expense
(59
)
 
(73
)
 
(110
)
Amortization of intangible assets
(267
)
 
(294
)
 
(321
)
Impairment of goodwill
—

 
(88
)
 
—

Restructuring charges
—

 
(19
)
 
(388
)
Transformation costs
(453
)
 
(414
)
 
(359
)
Disaster recoveries (charges)
7

 
—

 
(93
)
Acquisition, disposition and other related charges(2)
(764
)
 
(82
)
 
(203
)
Separation costs
—

 
(9
)
 
(248
)
Defined benefit plan remeasurement benefit
—

 
—

 
9

Interest and other, net
(177
)
 
(274
)
 
(327
)
Tax indemnification adjustments
377

 
(1,354
)
 
(3
)
Non-service net periodic benefit credit
59

 
121

 
61

Earnings (loss) from equity interests
20

 
38

 
(23
)
Total Hewlett Packard Enterprise consolidated earnings from continuing operations before taxes
$
1,553

 
$
268

 
$
272

 

(1)
Effective at the beginning of the first quarter of fiscal 2019, in connection with the adoption of the accounting standards update for retirement benefits (Topic 715), the Company reclassified its non-service net periodic benefit credit from operating expense to other income and expense in its Consolidated Statements of Earnings. The Company reflected these changes retrospectively, by transferring the non-service net periodic benefit credit, a portion of which was previously allocated to the segments, and the remainder of which was reported within Unallocated corporate costs and eliminations, Restructuring charges, Transformation costs, Separation costs and Defined benefit plan remeasurement benefit.
(2)
Includes acquisition, disposition and other related charges of $7 million related to a non-cash inventory fair value adjustment in connection with the acquisition of Cray Inc., which was included in Cost of products.
Segment Assets
Hewlett Packard Enterprise allocates assets to its business segments based on the segments primarily benefiting from the assets. Total assets by segment and the reconciliation of segment assets to Hewlett Packard Enterprise consolidated assets were as follows:
 
As of October 31,
 
2019
 
2018
 
In millions
Hybrid IT
$
28,866

 
$
29,342

Intelligent Edge
3,052

 
3,244

Financial Services
14,717

 
14,559

Corporate Investments
451

 
414

Corporate and unallocated assets
4,717

 
7,934

Total Hewlett Packard Enterprise consolidated assets
$
51,803

 
$
55,493


Major Customers
No single customer represented 10% or more of Hewlett Packard Enterprise's total net revenue in any fiscal year presented.
Geographic Information
Net revenue by country is based upon the sales location that predominately represents the customer location. For each of the fiscal years of 2019, 2018 and 2017, other than the U.S., no country represented more than 10% of Hewlett Packard Enterprise's net revenue.
Net revenue by country in which Hewlett Packard Enterprise operates was as follows:
 
For the fiscal years ended October 31,
 
2019
 
2018
 
2017
 
In millions
Americas
 
 
 
 
 
U.S. 
$
9,582

 
$
10,192

 
$
10,022

Americas excluding U.S.
1,922

 
2,135

 
2,067

Total Americas
11,504

 
12,327

 
12,089

Europe, Middle East and Africa
10,828

 
11,295

 
10,024

Asia Pacific and Japan
6,803

 
7,230

 
6,758

Total Hewlett Packard Enterprise consolidated net revenue
$
29,135

 
$
30,852

 
$
28,871



Net property, plant and equipment by country in which Hewlett Packard Enterprise operates was as follows:
 
As of October 31,
 
2019
 
2018
 
In millions
U.S. 
$
2,894

 
$
2,813

Other countries
3,160

 
3,325

Total net property, plant and equipment
$
6,054

 
$
6,138


Net revenue by segment and business unit was as follows:
 
For the fiscal years ended October 31,
 
2019
 
2018
 
2017
 
In millions
Hybrid IT


 


 


Hybrid IT Product


 


 


Compute
$
12,879

 
$
14,057

 
$
12,913

Storage
3,609

 
3,706

 
3,280

Total Hybrid IT Product
16,488

 
17,763

 
16,193

HPE Pointnext
6,337

 
6,735

 
6,746

Total Hybrid IT
22,825

 
24,498

 
22,939

Intelligent Edge


 


 


HPE Aruba Product
2,462

 
2,599

 
2,435

HPE Aruba Services
375

 
321

 
287

Total Intelligent Edge
2,837

 
2,920

 
2,722

Financial Services
3,581

 
3,671

 
3,602

Corporate Investments
507

 
543

 
553

Total segment net revenue
29,750

 
31,632

 
29,816

Eliminations of intersegment net revenue
(615
)
 
(780
)
 
(945
)
Total net revenue
$
29,135

 
$
30,852

 
$
28,871