Hewlett Packard Enterprise Raises Annual Profit Forecast

(Bloomberg) -- Hewlett Packard Enterprise Co., a maker of server computers, raised its annual profit forecast, signaling that the company’s cost-cutting measures and spending on new technologies are starting to pay off.

Profit excluding some items will be $1.56 to $1.66 this year, an increase of 5 cents a share on both ends of the guidance, the San Jose, California-based company said Thursday in a statement. Wall Street projected $1.58 a share, according to data compiled by Bloomberg.

Key Insights

• HPE Chief Executive Officer Antonio Neri has sought to trim expenses by firing workers and shrinking the company’s global footprint, while investing $4 billion in new technologies, including edge computing. HPE expects to start recouping that investment within the next two years.
• Revenue declined 1.6 percent to $7.55 billion, driven by a fall in demand for servers. Analysts had expected sales of $7.6 billion. In the last year, the company left a high-volume server segment that generated revenue but little profit.
• “We will accelerate revenue growth in the second quarter,” Neri said in an interview. Sales of HPE’s software-defined products increased 70 percent in the first quarter, he said, while demand for high-performance computing servers grew 50 percent -- despite a slight decline in total revenue from the server unit.

Market Reaction

Shares rose about 3.3 percent in extended trading after closing at $16.23 in New York. The stock has climbed more than 23 percent this year.

Know More

• For more details on the results, click here.
• Read the statement here.

To contact the reporter on this story: Nico Grant in San Francisco at ngrant20@bloomberg.net

To contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Andrew Pollack, Emily Biuso

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