I was reading the news in April 2025 when I saw the headline. Elliott Investment Management had built a $1.5 billion stake in Hewlett-Packard Enterprise.

I set down my Pepsi.

I know that company. I was CTO of Hewlett-Packard before the split. I built research programs, funded long-horizon projects, and hired people whose work wouldn't pay off for a decade. I fought to protect their budgets every quarter. I know what lives inside HPE, including what remains of one of the most important corporate research organizations in the world.

And I know what happens when an activist investor shows up.

Within three months, Elliott had a board seat, a strategy committee chaired by its appointee, and a cooperation agreement giving it direct access to the company's strategy. Every public statement from both sides mentioned "value creation" and "shareholder value." Not one mentioned research. Not one mentioned innovation. Not one mentioned long-term investment.

I've watched this playbook run before. The language is always the same. And what it destroys is always the same: not development, but research. The difference between those two words is the difference between a company with a future and a company coasting on fumes.

Why "R&D" Is a Lie on Every Income Statement

"R&D" shows up as a single line item on every public company's income statement, at least in the United States. Under U.S. accounting rules, companies expense all research and development costs as a single number. There's no requirement to separate the two. But it doesn't have to work this way.

International accounting standards under IFRS require companies to distinguish between research and development. Research costs get expensed, but development costs that meet specific criteria (technical feasibility established, intent to complete, probable future economic benefits) can be capitalized as assets. The practical effect is that companies reporting under IFRS must draw a line between research and development and defend it to their auditors. U.S. companies don't. They dump everything into one bucket, hand Wall Street a single number, and call it "R&D."

That single number is a gift to anyone who wants to cut research without anyone noticing.

Development is near-term product engineering: the next server, the next chip, the feature update shipping next quarter. It has predictable timelines, measurable milestones, and a clear connection to revenue.

Research is exploratory work with uncertain outcomes: a team discovering a new material, a group exploring a computing architecture that won't produce revenue for a decade, engineers filing foundational patents, and advanced technology projects embedded inside business units that are pushing beyond the current product roadmap. Research doesn't always happen in a formal lab. It happens wherever people are working on problems that don't have a clear connection to next quarter's revenue.

When activist investors demand cost cuts, they don't touch development. Development is visibly connected to next quarter's revenue. They cut research, the work that creates the future, but can't justify itself on a 90-day earnings call.

A company can shut down its long-horizon programs, reassign or let go of the people doing exploratory work, and pull funding from every project that isn't tied to a shipping product, while reporting the same R&D number to Wall Street. The "D" fills the gap. The financial statements look fine. The stock ticks up.

The damage doesn't appear for years.

R&D, Gross Margin, and the Time Delay That Fools Everyone

Wall Street's favorite innovation metric is R&D spending as a percentage of revenue. It's useless.

Intel had one of the highest R&D-to-revenue ratios in the industry, spending $16 to $17 billion per year, yet its gross margins collapsed from 56% to 33%. Apple spends a lower percentage and produces dramatically better outcomes. In my own work validating innovation metrics across public companies, R&D as a percentage of revenue failed to predict anything. It can't distinguish a company investing wisely in breakthrough research from one burning cash on development catch-up.

The metric that actually works is the relationship between R&D investment and gross margin, measured with a time delay. The logic is straightforward. Better research creates products and services that are meaningfully differentiated. When you truly understand your customer and build something they can't get anywhere else, they reward you with pricing power. They'll pay more. They'll stay longer. They won't switch to a competitor for less because nobody is offering the same thing. That pricing power shows up in gross margin, not revenue, which a company can grow by cutting prices and selling commodity products. Gross margin tells you whether customers value what you're selling enough to pay a premium for it.

Apple is the clearest example. They don't win on volume, and they don't compete on price. They invest in research that produces genuinely differentiated products, and their customers pay more because of it. Apple's gross margins are the envy of the industry despite a lower R&D-to-revenue ratio than Intel, which spends far more and earns far less per dollar.

But gross margin has a lag. The margin a company earns today is not the result of what it's spending on R&D today. It's the result of what it spent three, five, or even ten years ago. In consumer electronics and enterprise technology, that lag is typically three to five years. In materials science, five to eight. In pharma, ten to fifteen. The products commanding today's premium prices were funded by research budgets set years before the product ever shipped.

That lag is what makes the activist playbook so profitable. For the activist, cutting research today and the financial statements look better for 2 to 3 years. Expenses drop. The company is still coasting on the pipeline someone else built, so margins hold or even tick up. The stock responds. The activist declares victory and exits. The people left holding the bill are the employees whose jobs disappear when the pipeline empties, the long-term shareholders who are still holding when margins collapse, and the organization itself, stripped of the capability it spent years building and unable to get it back.

A peer-reviewed study published in the Strategic Management Journal examined 1,324 companies targeted by activist hedge funds between 2000 and 2016, compared against a control group of 7,670 companies that weren't targeted. Within five years, R&D spending at targeted companies dropped by 9%. Headcount fell 7%. The non-targeted firms outperformed across every measure.

But that 9% number understates the real damage. Based on everything I've seen, in the data and from the inside, that cut doesn't come equally from research and development. Development stays largely intact. It has to. You can't ship next quarter's product without it. The cut comes from research. The 9% reported reduction in total R&D masks what is, in many cases, the near-elimination of genuine exploratory work. And because it's hidden inside a single line item, nobody outside the organization ever sees it happen.

What "2% Research" Looks Like: HP's R&D Under the Microscope

I've been developing a methodology to separate research from development spending using public SEC filings: segment disclosures, patent data, and the language companies use in their own filings to describe what they're working on. My team and I call this the Innovation Signal Index™ (ISI), and I'll be publishing a detailed series on it. But the results for HP Inc. are worth previewing here.

HP reports $1.64 billion in annual R&D. Using the Innovation Signal Index, we estimate that between 2% and 4% of that is dedicated to actual research. The rest, 96% to 98%, is product development. Engineering the next version of existing PCs and printers.

The patent data corroborates it. New patent grants have dropped 40% since 2016, despite a portfolio of 22,000+ patents, and the quality and breadth of those patents have narrowed. When a company's patent output is declining while R&D spending holds flat, the money is flowing from research to development. HP's own filings confirm it: recent 10-K filings describe nothing but development work: "AI PCs," "enhanced features," "product line extensions." In the most recent filings, HP Labs isn't even named in the segment description anymore.

For a company of HP's scale, a healthy research allocation is 10-15% of the total R&D budget. HP is spending a fraction of that. It's in harvest mode. And the harvest always ends.

The ISI has been validated through backcasting against historical data across multiple companies. Applied to Intel's historical record, it would have flagged R&D investment losing its ability to generate gross-margin returns as early as 2017, approximately 5 to 6 years before the financial collapse became undeniable to the market. Applied to AMD, it would have detected a genuine shift in research investment patterns by 2015-2016, approximately 4 years before the market fully recognized the turnaround. In both cases, the financial results eventually confirmed what the framework would have shown. A small team and I are working to refine and test the methodology, and we'll be sharing more on that soon. The point here is simpler: the tools to see this coming exist. They just aren't the ones Wall Street uses.

Elliott, HPE, and the Activist Investor Playbook in Real Time

Which brings me back to HPE.

After Elliott's $1.5 billion stake and the July cooperation agreement, the pieces are now in place. A Strategy Committee chaired by Elliott's appointee. An integration committee is overseeing the $14 billion Juniper Networks acquisition. A one-year clock: Elliott can add a second board member if it’s not satisfied with progress. Since 2022, Elliott has ousted 14 CEOs at companies in which it has invested. CEO Antonio Neri has 12 months to move the stock.

I know what that pressure feels like from the inside. When a CEO's job depends on the next four quarters, every budget line is scrutinized for its contribution to this year's results. Research, with its uncertain timelines, its unpredictable outcomes, and its inability to improve next quarter's earnings, will be an obvious target. It always is.

We've Seen How This Ends: DuPont and the Death of 200 Years of Innovation

When Trian Fund Management pressured DuPont, a company that spent 200 years inventing Nylon, Kevlar, Neoprene, and Lycra, the company won the proxy fight 52% to 48%. It still cut R&D by 20%, laid off 5,000 people, and closed research facilities.

The CEO who won the proxy fight resigned months later. Her replacement merged DuPont with Dow Chemical and split the combined entity into three companies, fragmenting the integrated research organization that had invented entire categories of materials across chemistry, biology, and materials science. In 2024, the successor company announced plans to split again into three more pieces. A company that once commanded $36 billion in revenue and filed foundational patents across multiple scientific disciplines has been restructured so many times that there's almost nothing left to restructure.

Winning the proxy fight didn't save DuPont's research. The pressure alone was enough.

The $25 Billion Proof: Dell, Founder Control, and Long-Term Value

In 2013, Michael Dell and Silver Lake took Dell Technologies private for $24.9 billion. Through my relationship with Alex Mandl, my former boss at Teligent who led the board negotiations at Dell, I had a direct view of the thinking behind that decision. Dell's stated goal: no more pulling R&D and growth investments to make in-quarter numbers.

R&D spending went from $1.1 billion to $4.4 billion. Dell transformed from a declining PC company to an enterprise solutions leader. The return by 2023: an estimated $70 billion.

But the reason it worked goes deeper than just going private. Michael Dell was the founder. He put a significant portion of his own wealth into the deal alongside Silver Lake. He wasn't a hired CEO trying to survive the next proxy season. He was an owner making a generational bet with his own money. He had control, he had conviction, and he had the patience to let the investment pay off over years, not quarters.

That's the difference nobody talks about. The Dell transformation didn't happen because the company escaped public markets. It happened because the person making the R&D investment decisions was the same person bearing the financial risk, and he was willing to wait.

Why the HPE Situation Is Different and Worse

Compare that to what a CEO like Antonio Neri faces at HPE. He didn't found the company. He doesn't control the board. He has an activist investor with a one-year clock, the power to add board members, and a track record of removing 14 CEOs since 2022. This isn't a criticism of Neri. It's a description of the incentives the system creates. Any CEO in that position would face the same calculus: optimize for the next twelve months, because if you don't, you may not be there to see month thirteen. The system doesn't reward patience. It punishes it.

The financial signals at HPE are already pointing in the wrong direction. Gross margins have compressed from roughly 35% to 30% over the past three years, even as revenue has grown. R&D spending dropped from $2.3 billion in 2023 to $2.2 billion in 2024, a decline during a period when competitors are pouring money into AI research. And the language coming from HPE's own leadership tells the story: the CFO's most recent earnings statement emphasized "disciplined spending, portfolio simplification, and ongoing structural cost management." That's the vocabulary of cost reduction, not research investment.

Hewlett-Packard Labs still exists inside HPE. It's still doing work: quantum computing research selected for a DARPA initiative, photonics, and AI systems architecture. But the question is how long that continues when every dollar of spending gets evaluated against a twelve-month stock price target set by an activist with a board seat.

Elliott is simultaneously invested in HPE and in Dell, the company that proved you need the kind of ownership control Elliott would never grant in order to innovate. The Innovation Signal Index currently rates HPE a D+, placing it in the same warning territory Intel occupied in 2017, approximately five to six years before its financial collapse became undeniable. The first signal appeared in 2019, well before Elliott's arrival. The Juniper Networks acquisition genuinely complicates the current read: $4 billion in added revenue at different margin economics, and if Mist AI and Aruba networking capture meaningful enterprise share by 2026 to 2028, the signal could improve. That scenario is real and worth watching. But a D+ with a 2019 origin and an activist investor accelerating cost pressure is not a company with the luxury of waiting to find out.

NOTE: This analysis of HPE reflects innovation investment health only. It is not investment advice.

How to Protect R&D Before the Activist Investor Arrives

The playbook I've described is not inevitable. But stopping it requires different actions depending on where you sit: inside the company, on the board, or holding the stock.

If You Run the Company

If you lead a company with genuine research programs, the activist letter could arrive tomorrow.

The single-line-item reporting of R&D is the reason activist investors can cut research without shareholders noticing. The companies that voluntarily break out what they spend on near-term product work versus longer-horizon research, and explain the strategic rationale for each, stand on stronger ground when the pressure comes. No public company is required to do this. But the ones that do are no longer defending a cost. They're explaining an investment with a specific thesis and forcing the activist to argue against it, not just a number.

If you can't show the connection between your research and your future margins, an activist will fill that silence with their own narrative. Most CEOs talk about research in terms of possibility and potential. Investors don't fund possibilities. Show them the historical relationship between your R&D investment and your gross margin over time. Show them the lag. Show them that today's margins exist because of investments made years ago. Then ask the question no activist wants to answer: what happens to margins in 2029 if we cut research today?

DuPont spent $15 million fighting a proxy contest it almost lost, and the CEO who won it was still gone within months. The time to explain your innovation thesis to your largest shareholders is during a normal year, not during a crisis. The index funds and pension funds that ultimately decide these contests need to understand your research investment before they're asked to vote on it under pressure.

Once you establish that research is negotiable, it gets negotiated to zero. When pressure hits, the instinct is to compromise: cut some research, keep some, demonstrate "responsiveness" to shareholder concerns. This is how it always starts. Every quarter, the compromise gets a little deeper. Research is either a strategic commitment or it isn't.

If You Own the Stock

Your vote has more power than you think. This isn't just a fight for CEOs and boards. If you hold shares in a public company, whether through individual positions, a 401(k), or an index fund, you have a stake in whether that company's research survives. And your vote may be the one that decides it.

The DuPont proxy fight proved it. That's not hypothetical. When Trian launched its proxy fight against DuPont, both major proxy advisory firms, ISS and Glass Lewis, recommended that shareholders vote with the activist. Active fund managers overwhelmingly sided with Trian. DuPont should have lost. It didn't. Three index fund managers, Vanguard, BlackRock, and State Street, voted with management. CalPERS went on record against "cost-cutting which would reduce research and development." The margin of victory was 4 points. DuPont's retail shareholders, who held roughly 33% of the shares, voted overwhelmingly with management. Those weren't hedge fund managers. They were people who believed in the company's future, and they showed up.

Companies can hide research cuts inside a single R&D number because nobody asks them not to. During earnings calls, in shareholder letters, and at annual meetings, ask the company to break out near-term product development versus longer-horizon research. Most companies have never been asked. If enough investors ask, companies will start reporting it. And once it's visible, it's harder to quietly gut.

You don't need a finance degree to see the warning signs. Look at the 10-K. Look at the MD&A language. Is the company describing exploratory work, or is every sentence about incremental product updates? Are patent filings growing or shrinking? The information is public. Most investors never look past the single R&D line item.

Your time horizon is your advantage. An activist holding a one-year position needs the stock to move in twelve months. If you plan to hold for a decade, the research pipeline matters more to you than the next earnings beat. Act like it. When an activist shows up, and the plan is "operational efficiency" and "strategic review" with no mention of sustaining the innovation that created the company's value, that's a plan to harvest, not grow. Vote your shares. The DuPont proxy fight proved that long-term shareholders can outvote short-term activists. But only if they vote.

Research, Shareholder Value, and the Fights Worth Having

The gross margin that a company earns in 2030 is being determined right now by the research investments being made or not made today. The products that will define competitive position five years from now are being explored right now, or they aren't.

An activist investor holding a one-year position doesn't care about 2030 gross margin. They need the stock to move in the next twelve months. These two objectives are not aligned. They are directly opposed.

Every time a research program gets shuttered, every time a long-horizon project gets killed to fund a buyback, every time a "strategy committee" focused on "value creation" starts reviewing the R&D budget, the future gets a little smaller.

I spent years as CTO at the world's largest technology company by revenue, fighting to protect research investments against exactly this kind of pressure. I won some of those fights. I lost others. The ones I lost still cost HP.

The Innovation Signal Index flagged Intel's loss of competitive ground in 2017. The market didn't see it until 2023. That six-year gap is where research dies quietly, dressed up in the language of shareholder value. It's happening right now at HPE. The question for every CEO, board member, and investor reading this isn't whether it's happening. The question is whether you're going to do anything about it.

Phil McKinney is the former CTO of Hewlett-Packard and CEO of CableLabs. He writes about innovation and decision-making at philmckinney.com and on Substack.

Disclosure: This article is offered solely in the context of innovation investment health and competitive positioning. Phil McKinney is not a registered investment adviser. The Innovation Signal Index™ and any assessments derived from it are analytical tools for evaluating research and development practices, not instruments for evaluating securities. Nothing in this article should be construed as investment advice, a recommendation to buy or sell any security, or a solicitation of any investment decision. Readers making investment decisions should consult a qualified financial professional.

Endnotes

1. "Elliott Investment Management had built a $1.5 billion stake": CNBC, "HPE shares rise after activist Elliott Management takes $1.5 billion stake," April 15, 2025. https://www.cnbc.com/2025/04/15/hpe-shares-pop-after-activist-elliott-management-takes-1point15-billion-stake.html. HPE's stock had fallen more than 30% year-to-date at the time of the investment.
2. "a board seat, a strategy committee chaired by its appointee, and a cooperation agreement": Hewlett Packard Enterprise, "Hewlett Packard Enterprise Announces Board Enhancements to Support Ongoing Transformation and Drive Shareholder Value," press release, July 16, 2025. https://www.hpe.com/us/en/newsroom/press-release/2025/07/hewlett-packard-enterprise-announces-board-enhancements-to-support-ongoing-transformation-and-drive-shareholder-value.html. See also SEC filing: HPE Form 8-K, July 16, 2025. https://www.sec.gov/Archives/edgar/data/1645590/000164559025000081/hpe-20250716.htm. Robert Calderoni was appointed to the board and named chair of the new Strategy Committee. The cooperation agreement gives Elliott the option to add a second board member.
3. "Elliott has ousted 14 CEOs": Jim Edwards, "HPE's deal with activist investor Elliott may still cost CEO Antonio Neri his job, or end with a breakup of the company," Fortune, July 16, 2025. https://fortune.com/2025/07/16/hpe-elliott-management-ceo-antonio-neri-stock/.
4. "companies expense all research and development costs as a single number": Financial Accounting Standards Board, ASC 730, Research and Development. ASC 730-10-50-1 requires disclosure of "total research and development costs charged to expense" as a single figure. No separation between research and development phases is required under U.S. GAAP.
5. "IFRS require companies to distinguish between research and development": International Accounting Standards Board, IAS 38, Intangible Assets, paragraphs 54-67. Research costs are expensed immediately; development costs meeting six specific criteria may be capitalized. See also KPMG, "R&D costs: IFRS Accounting Standards vs. US GAAP," May 2025. https://kpmg.com/us/en/articles/2025/rd-costs-ifrs-accounting-standards-us-gaap.html.
6. "Intel had one of the highest R&D-to-revenue ratios": Intel Corporation, Annual Reports on Form 10-K, fiscal years 2016-2024. R&D spending ranged from $12.7B to $17.5B. Gross margin declined from approximately 56% in FY2020 to approximately 33% in certain quarters of FY2024.
7. "that lag is typically three to five years": Bronwyn H. Hall, Jacques Mairesse, and Pierre Mohnen, "Measuring the Returns to R&D," in Handbook of the Economics of Innovation, vol. 2 (Amsterdam: North-Holland, 2010), 1033-82. The meta-analysis found R&D typically materializes in business results across a 2-3 year horizon in manufacturing. Pharmaceutical lag estimates draw from Joseph A. DiMasi, "The Value of Improving the Productivity of the Drug Development Process," PharmacoEconomics 20, supplement 3 (2002): 1-10.
8. "1,324 companies targeted by activist hedge funds": Mark R. DesJardine and Rodolphe Durand, "Disentangling the Effects of Hedge Fund Activism on Firm Financial and Social Performance," Strategic Management Journal 41, no. 6 (June 2020): 1054-82. R&D spending fell 6% in year one and 9% by year five. Headcount declined 7%. Non-targeted firms consistently outperformed. See also HEC Paris, "Activist Hedge Funds: Short-Term Gains Offset by Drop in Companies' Value in Long Term." https://www.hec.edu/en/news-room/activist-hedge-funds-short-term-gains-offset-drop-companies-value-long-term-new-research-finds.
9. "HP reports $1.64 billion in annual R&D": HP Inc., Annual Report on Form 10-K, fiscal year ended October 31, 2024. https://s203.q4cdn.com/918857832/files/doc_financials/2024/ar/2024-Form-10-K.pdf.
10. "HP Labs was part of its 'Corporate Investments' segment": HP Inc., Annual Report on Form 10-K, fiscal year ended October 31, 2016. https://www.sec.gov/Archives/edgar/data/47217/000004721716000093/hp-103116x10k1.htm. The filing states: "HP Labs is part of our Corporate Investments segment." In FY2023 and FY2024 10-K filings, the segment is described as "certain business incubation and investment projects" without naming HP Labs.
11. "New patent grants have dropped 40% since 2016": HP Inc., Annual Reports on Form 10-K, fiscal years 2016-2024. The FY2016 10-K reported a portfolio of "over 18,000 patents" (post-split). By FY2024, the portfolio was reported as "over 23,000 patents." While total portfolio size grew through accumulation, annual new grant rates declined substantially over the same period. See also GreyB patent analytics, "HP Patents Key Insights & Stats," https://insights.greyb.com/hewlett-packard-patents/, which tracks USPTO grant activity by assignee. The 40% decline figure refers to the rate of new annual grants, not cumulative portfolio size.
12. "DuPont won the proxy fight 52% to 48%": Sullivan & Cromwell LLP, "DuPont's Victory in the Proxy Fight with Trian," Harvard Law School Forum on Corporate Governance, May 20, 2015. https://corpgov.law.harvard.edu/2015/05/20/duponts-victory-in-the-proxy-fight-with-trian/. DuPont's 12 incumbent directors were reelected despite both ISS and Glass Lewis recommending votes for Trian's nominees. Vanguard, BlackRock, and State Street voted with management.
13. "cut R&D by 20%, laid off 5,000 people": DuPont, Annual Report, fiscal year 2016. https://www.annualreports.com/HostedData/AnnualReportArchive/d/NYSE_DD_2016.pdf. The filing states R&D was $1.6 billion in 2016, $1.9 billion in 2015, and $2.0 billion in 2014, a decline of approximately 15-20% from peak. See also Chemical & Engineering News, "DuPont Cuts 2016 R&D Budget Ahead of Merger With Dow Chemical," January 29, 2016. https://cen.acs.org/articles/94/i5/DuPont-Cuts-2016-RD-Budget.html. C&EN reported the cuts included dismissal of more than 200 Central Research & Development scientists and the elimination of DuPont's storied Central R&D organization as part of a broader effort to cut 10% of the firm's 54,000 employees.
14. "The CEO who won the proxy fight resigned months later": CNBC, "DuPont CEO Ellen Kullman to retire; Company cuts earnings outlook," October 5, 2015. https://www.cnbc.com/2015/10/05/dupont-says-ceo-ellen-kullman-to-retire.html. Kullman's retirement was announced October 5, 2015, effective October 16, approximately five months after winning the proxy fight. Edward Breen, a sitting DuPont board member and former CEO of Tyco International, was named interim and then permanent CEO.
15. "announced plans to split again into three more pieces": Dave Kranz, "DuPont to split into 3," Chemical & Engineering News 102, web edition, May 23, 2024. https://cen.acs.org/business/finance/DuPont-split-3/102/web/2024/05.
16. "Dell and Silver Lake took Dell Technologies private for $24.9 billion": Silver Lake, "Dell Completes Go-Private Transaction," press release, October 29, 2013. https://www.silverlake.com/dell-completes-go-private-transaction/. The transaction closed October 29, 2013, at $13.88 per share in total consideration. See also Wall Street Journal, "Michael Dell: Going Private Is Paying Off for Dell," November 24, 2014. https://www.wsj.com/articles/michael-dell-going-private-is-paying-off-for-dell-1416872851.
17. "R&D spending went from $1.1 billion to $4.4 billion": Dell Technologies, Annual Reports on Form 10-K, fiscal years 2013-2018. Available via SEC EDGAR: https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001571996&type=10-K&dateb=&owner=include&count=40.
18. "The return by 2023: an estimated $70 billion": Wall Street Oasis, "Private Equity Case Study: Dell Technologies," April 4, 2024. https://www.wallstreetoasis.com/forum/private-equity/the-leading-research-journal-for-the-operating-side-of-private-equity-covering. See also PitchBook, "Silver Lake's Dell set to go public again in unique $21.7B deal," July 27, 2018. https://pitchbook.com/news/articles/silver-lakes-dell-set-to-go-public-again-in-unique-217b-deal. The $70 billion figure reflects combined returns to Michael Dell and Silver Lake from the 2013 buyout through 2023, accounting for the EMC acquisition and return to public markets.
19. "Gross margins have compressed from roughly 35% to 30%": HPE, Annual Reports on Form 10-K and quarterly earnings press releases, fiscal years 2023-2025. FY2023 gross margin approximately 35.1% ($10.2B gross profit on $29.1B revenue). FY2025 gross margin approximately 30.2% ($10.4B gross profit on $34.3B revenue). See also Yahoo Finance, HPE Income Statement. https://finance.yahoo.com/quote/HPE/financials/.
20. "R&D spending dropped from $2.3 billion in 2023 to $2.2 billion in 2024": HPE, Annual Report on Form 10-K, fiscal year ended October 31, 2024. https://investors.hpe.com/~/media/Files/H/HP-Enterprise-IR/documents/10-K-123124.pdf. The filing states: "Expenditures for R&D were $2.2 billion in fiscal 2024, $2.3 billion fiscal 2023, and $2.0 billion in fiscal 2022."
21. "disciplined spending, portfolio simplification, and ongoing structural cost management": Marie Myers, CFO, Hewlett Packard Enterprise, Q4 FY2025 earnings press release, December 4, 2025. https://www.hpe.com/us/en/newsroom/press-release/2025/12/hpe-reports-fiscal-2025-fourth-quarter-results.html.
22. "quantum computing research selected for a DARPA initiative": HPE Newsroom, "Hewlett Packard Labs' quantum supercomputing framework selected for DARPA Quantum Benchmarking Initiative," April 3, 2025. https://www.hpe.com/us/en/newsroom/blog-post/2025/04/hewlett-packard-labs-quantum-supercomputing-framework-selected-for-darpa-quantum-benchmarking-initiative.html.
23. "DuPont spent $15 million": Dave Kranz, "DuPont Fends Off Activist Challenge," Chemical & Engineering News 93, no. 20, May 13, 2015. https://cen.acs.org/articles/93/web/2015/05/DuPont-Fends-Off-Activist-Challenge.html. Trian spent approximately $6 million.
24. "ISS and Glass Lewis, recommended shareholders vote with the activist": Sullivan & Cromwell LLP, "DuPont's Victory in the Proxy Fight with Trian," Harvard Law School Forum on Corporate Governance, May 20, 2015. https://corpgov.law.harvard.edu/2015/05/20/duponts-victory-in-the-proxy-fight-with-trian/.
25. "CalPERS … went on record expressing concern about 'cost cutting which would reduce research and development'": John C. Coffee, Jr., "The Lessons of DuPont: Corporate Governance For Dummies," Columbia Law School Blue Sky Blog, June 1, 2015. https://clsbluesky.law.columbia.edu/2015/06/01/the-lessons-of-dupont-corporate-governance-for-dummies/. CalPERS' Anne Simpson, Director of Corporate Governance, publicly criticized Trian's thesis as "relatively short term."
26. "DuPont's unusually large retail shareholder base, roughly 33%": Sullivan & Cromwell LLP, "DuPont's Victory in the Proxy Fight with Trian," Harvard Law School Forum on Corporate Governance, May 20, 2015. https://corpgov.law.harvard.edu/2015/05/20/duponts-victory-in-the-proxy-fight-with-trian/. The analysis noted that DuPont's retail shareholder base of approximately 33% was "atypically high."
27. "Innovation Signal Index": The Innovation Signal Index™ (ISI) is a proprietary framework for assessing the health and forward momentum of a company's research investment. It draws on multiple sources, including patent data, published technical research, SEC filings, and reported R&D spend. Backcasting validation applies the framework to historical data to test whether signals preceded financial outcomes. More details are forthcoming.