HPE Core Business Gains Strongly -- WSJ
February 23 2018 - 03:02AM
Dow Jones News
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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