Palo Alto Networks takes losses, targets SDN security to retain disruptor lead

Palo Alto Networks reduces its operating loss significantly on a year-to-year basis on the back of strong revenue growth

Palo Alto Networks’ enterprise security revenue has increased approximately 50% year-to-year for the past four quarters, and the vendor has been reinvesting a large portion of its revenue to ensure it has sufficient resources in place to deliver to its growing customer base. In 1Q15 Palo Alto Networks’ revenue increased 66% year-to-year and the vendor’s operating expenses accounted for 88.2% of total revenue. Additionally, the vendor operated at a loss of 15.7% in 1Q15, which was a significant improvement over a loss of 96.7% in 1Q14. TBR believes Palo Alto Networks will continue to invest for growth and forego net profits until it reaches 100,000 customers — about the same number of customers that competitor Check Point has today. The larger customer base, on par with its key competitor, will provide higher revenue and renewals to enable Palo Alto Networks to begin stabilizing expenses and earning net profits.

Continue reading

Posted in 1Q15, Palo Alto Networks, TBR | Tagged , , , , , | Leave a comment

Workday pursues portfolio, geographic and ecosystem expansion

Expansion and cross-selling are Workday’s key tactics to compete in the large enterprise market

Workday remains squarely focused on expansion in portfolio, geographic and ecosystem as the company competes for mindshare in the large enterprise space against traditional vendors SAP and Oracle. Workday cited a record number of new customers in the quarter including Coca-Cola, Dell and Hitachi, while achieving revenue growth of 57% year-to-year to $251 million in 1Q15. Continue reading

Posted in 1Q15, Earnings, TBR, Workday | Tagged , , , , , , | Leave a comment

EMC acquires a modern cloud value proposition that maps to legacy strengths with Virtustream

By Krista Macomber, Analyst

EMC made a significant portfolio evolution by entering the managed cloud services space with its $1.2 billion acquisition of Virtustream on May 26, 2015. Historically hardware-centric, EMC has struggled to evolve its MO during the rapid industry transition to “as a Service” IT delivery. Per TBR estimates, 80% of the cloud revenue that EMC generated in 2014 came from the sale of hardware and software components to help customers build clouds. TBR expects EMC to remain a product-centric vendor; EMC will remain focused on helping customers migrate to, build and manage clouds as opposed to aggressively shifting its portfolio to favor cloud services. However, the acquisition is EMC’s most significant indication to date that it is committed to building differentiation and providing value to customers through targeted cloud services portfolio bets. Continue reading

Posted in 1Q15, acquisition, EMC, TBR, Virtustream | Tagged , , , , , , | Leave a comment

HP’s financial declines and business challenges persist as the vendor prepares to split

By Stephen Belanger, Analyst

HP solidifies its plans to split into 2 companies in November 2015

HP’s corporate revenue decreased a reported 6.8% year-to-year to $25.5 billion in 1Q15, as revenue from each of the vendor’s business units declined on a year-to-year basis. Personal Systems revenue declined 5% year-to-year, caused primarily by weak commercial PC sales, particularly of desktops (desktop units were down 14% year-to-year in 1Q15). Over the same period, HP limited Enterprise Group revenue declines to 1%, as 11% year-to-year industry-standard server (ISS) revenue growth partially offset storage, proprietary server and networking declines. HP’s operating margin was down 110 basis points to 5.6% of revenue, which TBR attributes to hardware pricing challenges and subsequent gross margin pressure. Continue reading

Posted in 1Q15, computing, earnings release, initial response, TBR | Tagged , , , , , , , | Leave a comment

Booz Allen Hamilton’s consulting and design capabilities are a key underpinning in international expansion and domestic business retention

By Sebastian Lagana, Senior Analyst

Booz Allen Hamilton’s targeted investments in growth areas position the firm to trim revenue contractions during its FY16

Booz Allen Hamilton (BAH) announced 1Q15 year-to-year revenue contraction of 4.1%, as growth within its federal civilian sector and still-nascent international operations was not enough to offset contractions among core defense and intelligence clients. These same pressures impacted BAH’s full-year revenue, which was down 3.7% year-to-year. Continue reading

Posted in earnings release, professional services, TBR | Tagged , , , , , | Leave a comment

Downsizing in ES allows HP to maintain, and improve, margins despite sharp revenue decline

By Cassandra Mooshian, Analyst

Revenue contraction worsened for HP Services in 1Q15 while continued declines are expected throughout 2015

HP reported $6.75 billion in Services revenue in 1Q15 (FY2Q15), down 13.6% from the year-ago quarter and 3.3% sequentially. Technology Services (TS) revenue declined 8.3% from 1Q14 to $1.9 billion while Enterprise Services (ES) revenue declined 15.5% over the same compare to $4.8 billion. Revenue from HP ES’ IT Outsourcing (ITO) and Applications and Business Services (ABS) segments declined 20.2% and 7.6% year-to-year, respectively, in 1Q15 due to weakness in EMEA, key account runoffs and the shift to private and managed cloud environments. HP is, however, gaining momentum in ES around serving the new style of IT, particularly around managed cloud services. Continue reading

Posted in 1Q15, commentary, initial response, professional services, TBR | Tagged , , , , , | Leave a comment

Slowing PC revenue growth will lead Lenovo to emphasize its data center business

By Dan Callahan, Research Analyst

Without relief from acquisitions, slowing momentum within Lenovo’s base PC business lead to single-digit organic growth

Lenovo’s corporate growth slowed in 1Q15 as it faced a perfect storm of business conditions. Its PC unit shipments leveled off, affecting its base business, while revenue from its recent acquisition IBM System x declined. While Motorola’s overall revenue did increase, the acquisition did not provide the expected boost in China as shipments were down in the region. Lenovo’s net sales increased 21.1% year-to-year to $11.3 billion. TBR estimates Lenovo’s organic revenue growth to lower; nearly 7% year-to-year. Continue reading

Posted in 1Q15, commentary, computing, earnings release, TBR | Tagged , , | Leave a comment