HP Enterprise Forecasts Profit That Beats Analysts' Estimates

(Bloomberg) -- Hewlett Packard Enterprise Co. rose after giving a profit forecast that topped analysts’ estimates, signaling that it’s starting to benefit from cost cuts and a push into higher-margin businesses, such as networking and services.

Key Takeaways

• The results were boosted by services and sales of higher-margin servers, showing that Chief Executive Officer Antonio Neri is making early progress on a turnaround.
• The company expects profit of 39 to 44 cents a share in its fiscal fourth quarter. Analysts estimated 42 cents on average, according to data compiled by Bloomberg.
• Sales came in at $7.8 billion in the period ended July 31. That beat Wall Street expectations, too.
• Tarek Robbiati, former chief financial officer at Sprint Corp., will succeed Tim Stonesifer as HPE’s CFO. Stonesifer will depart in October.

Market Reaction

• Shares rose about 1 percent in extended trading after closing at $16.74 in New York. The stock has climbed more than 15 percent this year.

Executive Commentary

• “IT spending is continuing to be solid and we are executing better,” Neri said. “We have the right strategy and the right portfolio in an area that’s rapidly growing, intelligent edge.”
• Neri’s talking about a $4 billion bet on “intelligent edge” computing products that crunch data closer to where information is generated.

The Raw Numbers

• HPE expects full-year adjusted earnings of $1.50 to $1.55 a share. Wall Street was looking for $1.47.
• Fiscal third-quarter adjusted earnings came in at 44 cents a share, also beating analysts’ estimates.
• HPE’s adjusted operating margin was 9.6 percent, up from 6.9 percent a year earlier.

©2018 Bloomberg L.P.