By Maria Armental 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (February 23, 2018).

Rising sales of storage and networking devices powered Hewlett Packard Enterprise Co.'s core business during the holiday quarter, helping the company raise its annual profit targets while boosting planned returns to shareholders.

The Silicon Valley company, born from the 2015 split of Hewlett-Packard, also recorded a fivefold rise in profit for its fiscal first quarter, helped by the U.S. tax overhaul.

Hewlett Packard Enterprise plans to lift its dividend 50% in its third quarter and buy back over $5.5 billion of its stock through the end of its fiscal 2019, targeting a return of about $7 billion to shareholders. The announcement Thursday from Chief Executive Antonio Neri, who has been in the role since Feb. 1, comes as several technology companies have revealed their plans in recent weeks about how they plan to spend cash now held abroad.

HPE also said it would significantly increase its contribution to workers' 401(k) retirement plans and set some money aside for employee degree-assistance programs.

Investors had been looking for signs of what HPE intended to do with its cash, which stood at $7.67 billion as of Jan. 31, and sent the company's shares up 11% to $18.24 in after-hours trading.

Shares in HP Inc., the other half of the company founded in 1939 in a Palo Alto, Calif., garage, rose 5.7% after hours as the printer and personal-computer maker lifted its annual outlook and said the U.S. tax-law changes could result in "near-term shareholder return opportunities." The company, which also posted first-quarter results Thursday, showed double-digit revenue growth in its printing and computer businesses.

Mr. Neri, a longtime veteran of the company, is filling the CEO role left by Meg Whitman, who has described him as having a deep business-to-business enterprise technology background. Ms. Whitman's tenure at Hewlett-Packard was marked by aggressive cost-cutting and ultimately one of the largest corporate breakups. Mr. Neri, a trained engineer, rose through the ranks to run the servers and networking business.

On Thursday, Mr. Neri said he was focused on establishing a new culture as part of HPE's latest transformation, "and to really architect the company from the ground up with a clean-sheet approach."

Mr. Neri is also charged with executing HPE Next, a three-year plan announced in June that calls for at least $750 million in net cost-savings, including about $250 million this year.

Asked Thursday if company spending plans included large mergers and acquisitions, Mr. Neri said that while HPE intends to focus on innovation and partnerships, it would be open to a deal "if there's an opportunity there with the right valuation."

Over all, HPE's first-quarter profit was $1.44 billion, or 89 cents a share, compared with $267 million, or 16 cents a share, a year earlier. Excluding one-time items, HPE earned 34 cents a share. Revenue rose 11% to $7.67 billion.

Analysts surveyed by Thomson Reuters had expected 22 cents a share in adjusted profit and $7.07 billion in revenue.

Data-center networking and storage revenue, part of its hybrid information-technology segment, rose 27% and 24%, respectively.

HPE raised its annual adjusted per-share profit target by 20 cents to a range of $1.35 to $1.45 a share. For the current quarter, HPE expects to earn between 29 cents and 33 cents on an adjusted per-share basis, which came in ahead of analysts' expectations.

--Austen Hufford contributed to this article.

Write to Maria Armental at maria.armental@wsj.com

 

(END) Dow Jones Newswires

February 23, 2018 02:47 ET (07:47 GMT)

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