XML 28 R18.htm IDEA: XBRL DOCUMENT
v3.25.1

Goodwill | 6 Months Ended
--- | ---
Apr. 30, 2025
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill | Goodwill Goodwill is tested for impairment at the reporting unit level. As of November 1, 2024, the Company reassessed its reporting units and determined that the former Compute and High Performance Computing & Artificial Intelligence reporting units (within the Server segment) met the criteria to qualify as a single Server reporting unit. As of April 30, 2025, the Company's reporting units are consistent with the reportable segments identified in Note 2, “Segment Information”, with the exception of Corporate Investments and Other, which contains the A & PS reporting unit. The following table represents the carrying value of goodwill, by reportable segment as of April 30, 2025 and October 31, 2024.
| Server |  |  |  |  |  | Hybrid Cloud |  | Intelligent Edge |  | Financial Services |  | Corporate Investments and Other |  | Total
| In millions
Balance as of October 31, 2024 | $ | 10,194 |  |  |  |  |  |  | $ | 4,839 |  |  | $ | 2,909 |  |  | $ | 144 |  |  | $ | — |  |  | $ | 18,086 |
Goodwill impairment | — |  |  |  |  |  |  | (1,361) |  |  | — |  |  | — |  |  | — |  |  | (1,361) |
Balance as of April 30, 2025(1) | $ | 10,194 |  |  |  |  |  |  | $ | 3,478 |  |  | $ | 2,909 |  |  | $ | 144 |  |  | $ | — |  |  | $ | 16,725 |
(1) Goodwill is net of accumulated impairment losses of $3.1 billion. Accumulated impairment increased by $1.2 billion from October 31, 2024 due to a $1.4 billion Hybrid Cloud reporting unit impairment, partially offset by a decrease due to the disposition of CTG (the Communications and Media Solutions reporting unit). Goodwill is tested annually for impairment, as of the first day of the fourth quarter and whenever events or changes in circumstances indicate the carrying amount of goodwill may not be recoverable. The Company performed interim goodwill impairment tests as of November 1, 2024 and April 30, 2025. November 1, 2024 Interim Impairment Test An interim impairment test was performed as of November 1, 2024 based on organizational changes impacting the Hybrid Cloud and Server reporting units. The interim impairment test did not result in an impairment of goodwill. April 30, 2025 Interim Impairment Test During the second quarter of fiscal 2025, the macroeconomic environment experienced a rapid deterioration, primarily driven by the announcement and subsequent modifications of international tariffs, an escalation in global trade tensions, and increasing geopolitical uncertainty. These events have contributed to significant movement in inputs used to determine the weighted-average cost of capital. As of April 30, 2025, the Company determined that an indicator of potential impairment existed to require an interim quantitative goodwill impairment test for its reporting units. Based on the results of the interim quantitative impairment test performed as of April 30, 2025, the fair value of the Hybrid Cloud reporting unit was below the carrying value assigned to Hybrid Cloud. The decline in the fair value of the Hybrid Cloud reporting unit was primarily driven by an increase in the discount rate used in the discounted cash flows analysis, which reflected heightened macroeconomic uncertainty and changes in market conditions. The fair value of the Hybrid Cloud reporting unit was based on a weighting of fair values derived most significantly from the income approach, and to a lesser extent, the market approach. Under the income approach, the Company estimates the fair value of a reporting unit based on the present value of estimated future cash flows which HPE considers to be a level 3 unobservable input in the fair value hierarchy. Prior to the quantitative goodwill impairment test, the Company tested the recoverability of long-lived assets and other assets of the Hybrid Cloud reporting unit and concluded that such assets were not impaired. The quantitative goodwill impairment test indicated that the carrying value of the Hybrid Cloud reporting unit exceeded its fair value by $1.4 billion. As a result, the Company recorded a goodwill impairment charge of $1.4 billion in the second quarter of fiscal 2025. Subsequent to the impairment of Hybrid Cloud reporting unit, the indicated fair values of the reporting units exceeded their respective carrying amounts by a range of 0% to 112%. In order to evaluate the sensitivity of the estimated fair value of the reporting units in the goodwill impairment test, the Company applied a hypothetical 10% decrease to the fair value of each reporting unit. Based on the results of this hypothetical 10% decrease, all of the reporting units had an excess of fair value over carrying amount, except Server and Hybrid Cloud. The Hybrid Cloud reporting unit has remaining goodwill of $3.5 billion as of April 30, 2025 and an excess of fair value over carrying value of net assets of 0% as of the interim test date. Hybrid Cloud business is transitioning to a more cloud-native, software-defined platform with HPE Alletra. Translating this growth to revenue and operating income will take time because a greater mix of high margin business, such as ratable software and services, are deferred and recognized in future periods. The excess of fair value over carrying amount for the Server reporting unit was 3%. The fair value of the Server reporting unit was also impacted by an increase in the discount rate used in the discounted cash flow analysis, driven by heightened macroeconomic uncertainty. The Server reporting unit has a goodwill balance of $10.2 billion as of April 30, 2025. In the current macroeconomic and inflationary environment, customers have invested selectively, resulting in moderate unit growth and competitive pricing in the traditional servers business. While the AI servers business is growing at a faster pace, because graphics processing units represent a large portion of the solutions, the pricing is very competitive and margins are limited. The Server business continues to focus on capturing market share in both traditional and AI servers, while maintaining operating margin and leveraging its strong portfolio of products. If the global macroeconomic or geopolitical conditions worsen, projected revenue growth rates or operating margins decline, weighted average cost of capital increases, or if the Company has significant or sustained decline in its stock price, it is possible its estimates about the Hybrid Cloud and Server reporting units’ ability to successfully address the current challenges may change, which could result in the carrying value of the Hybrid Cloud and Server reporting units exceeding their estimated fair value and potential impairment charges.

X
- References No definition available. + Details
Name: | us-gaap_GoodwillAndIntangibleAssetsDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for goodwill and intangible assets. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 350 -SubTopic 30 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/350-30/tableOfContent Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 350 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/350-20/tableOfContent + Details
Name: | us-gaap_GoodwillAndIntangibleAssetsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration