CSC announces HPE enterprise services merger to create $26bn business

Meg Whitman

HPE CEO Meg Whitman

CSC has announced it will be merging with the enterprise services segment of HPE, as the latter reported its fourth consecutive quarter of year-over-year revenue growth.

Revenues for 2016 Q2 were reported at $12.7 billion, up more than 1%, as the team attributed the success to its servers, storage, networking and converged infrastructure business units. The enterprise services unit also saw a healthy performance, and will now be spun out and merged with CSC to create a $26 billion organization.

“The transaction is currently targeted to be completed by March 31, 2017,” said HPE CEO Meg Whitman on the company’s earnings call. “For the combined CSC and Enterprise Services, this will create a new company that will be a pure-play global IT services leader. For customers, this means global access to world class offerings in cloud, mobility, application development and modernization, business process services, IT services, big data and analytics, and securities.”

The move comes six months after CSC underwent a similar split to HP and HPE. CSC serves commercial and government clients globally, whereas CSRA targets public sector clients in the United States. Following the completion of the transaction next year, CSC’s current president and CEO Mike Lawrie will continue to head up the new company, though the new brand has not been released as of yet. Both companies have seemingly benefited from their respective splits in recent months, demonstrating healthy growth since the two separations.

Since the CSC separation, the company has been aggressively reinforcing its position in the market with various acquisitions and joint ventures. Created CeleritiFinTech, a joint venture with HCL, to strengthen its position in the banking sector, acquired UXC to increase its footprint in the Australia-New Zealand region and bought Xchanging to bolster its insurance solutions.

“Our proposed merger with HPE Enterprise Services is a logical next step in CSC’s transformation,” Lawrie said. “As a more powerful and versatile global technology services business, the new company will be well positioned to innovate, compete and serve clients in a rapidly changing marketplace. We are excited by the great potential this merger brings to our people, clients, partners and investors, and by the opportunity to strengthen our relationship and collaboration with HPE.”

In terms of HPE moving forward, Whitman highlighted next generation software defined infrastructure is a priority for the business, focused on servers, storage, networking, converged infrastructure, hyper-converged, and Helion. The company has stated it will remain open to future acquisitions, though it would appear there aren’t any major targets in the pipeline as Whitman seemed ‘standoffish’ during the earnings call.