Hewlett Packard Enterprise is the latest high-profile tech company to exit the Silicon Valley area for greener pastures elsewhere.
In Tuesday's Q4 earnings, HPE announced it would relocate its headquarters from San Jose, California to Houston, Texas. HPE is in the process of building its new headquarters, but the company plans to keep its campus in San Jose.
On the earnings call, HPE CEO and President Antonio Neri said there would be no impact on jobs in California related to the move to Texas. As of last year, HPE had just over 61,000 employees worldwide, according to Statista. According to LinkedIn, there are around 5,992 HPE employees in the Bay Area. HPE employees in California can voluntarily make the move to Houston, according to Neri.
“The global pandemic has forced businesses to rethink everything from remote work and collaboration to business continuity and data insight,” Neri said in the company’s fourth-quarter earnings release.
Neri said construction on the Houston headquarters started earlier this year and the cost was already included in HPE's financial numbers.
According to a Seeking Alpha transcript of the earnings call, Neri said HPE "learned quite a bit about the team preferences about the future to work."
"Let me be clear, our technological hub for innovation, particularly in Aruba, Software and Storage is in Silicon Valley," Neri said. "And basically what we are doing is consolidating our Silicon Valley footprint in the state of our San Jose headquarters that we opened last year. This is our technological hub.
"Now, for non-technical hub and as jobs, we decided to move the headquarters to Texas, because you have access to diverse talent and ability to attract and retain is unique and differentiated. So, what we are creating here is two very strong hubs with clear mandates on each of them."
Neri said the move to Texas wasn't related to tax benefits since HPE is incorporated in Delaware. Neri did note that real estate in Houston would provide savings over the cost of real estate in the Bay Area.
The pandemic has led to several high profile tech companies exiting California as many employees started working from home. Palantir Technologies announced earlier this year it was moving its headquarters from Palo Alto, California to Denver.
In August, Pinterest terminated its San Francisco office lease while Dropbox announced in October that it would switch to a permanent work from home model. The Bay Area is also known for traffic congestion and a high cost of living while the state's taxes are also high.
Founded in 1936 in a garage in Palo Alto by Bill Hewlett and Dave Packard, Hewlett-Packard was among the first successful tech companies located in Silicon Valley. In 2015, Hewlett Packard created Hewlett Packard Enterprise while renaming the legacy PC and printing business HP Inc.
In the fourth quarter, adjusted earnings for HPE were 37 cents a share, down 24% from a year ago, with revenue falling flat at $7.2 billion. In the same quarter a year ago, HPE's earnings were 49 cents a share on sales of $7.21 billion. Analysts expected HPE earnings of 34 cents on sales of $6.88 billion for the quarter that ended Oct. 31.