HP Inc. signage stands at the entrance to the company’s headquarters in Palo Alto, California (Photographer: David Paul Morris/Bloomberg)

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.

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