Home Daily Blitz Hewlett Packard Enterprise Earnings: What to Watch

Hewlett Packard Enterprise Earnings: What to Watch


wsj articleThe following is an excerpt from Don Clark | March 3, 2016 | WSJ.com |

Hewlett Packard Enterprise Co.HPE +1.71% is scheduled Thursday to issue its first separate quarterly results since the former Hewlett-Packard Co. unit was split off from the entity dubbed HP Inc., which is mainly known for personal computers and printers.

Here is what you need to know:

EARNINGS FORECAST: Analysts on average expect adjusted earnings per share for the period ended Jan. 31 of 40 cents, according to Thomson Reuters, compared to 44 cents in the year-earlier period under pro forma figures released by the company this week.

REVENUE FORECAST: Wall Street analysts expect revenue of $12.7 billion, down from $13.1 billion for that period in 2015.


–SERVER STRENGTH: HP Enterprise is the biggest maker of computers used in corporate data centers, accounting for nearly a third of global revenue in that business. The company has been enjoying steady growth lately in what it calls “industry-standard” servers, based on chip technology from Intel Corp.INTC +0.76% and Advanced Micro Devices Inc.AMD -1.30% favored by Web giants that have been spending steadily. But HP Enterprise in the fourth quarter reported an 8% decline in higher-end “business critical” systems, which was actually that category’s strongest performance in three years. Analysts will be watching for positive or negative demand trends in both kinds of hardware, amid recent signs that some companies are cutting back their spending.

–NETWORKING OPPORTUNITIES: Networking gear is a smaller business for the company, but it’s been a rare pocket of growth. Revenue rose 35% in the quarter ended in October, aided by the $3 billion acquisition last year of wireless equipment maker Aruba Networks. The company also reached a $2.3 billion deal to sell a majority stake in its networking business in China to a company affiliated with Tsinghua University. HP Enterprise had expected a first quarter close of that transaction, which would put money in the company’s back account while reducing networking revenue. Any update by management on the fate of that transaction may be a hot topic on the company’s earnings call.

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