Networking Sales Help HPE Results Beat Expectations

Hewlett Packard Enterprise (HPE) has pleased Wall Street after it posted a modest rise in revenue, despite some significant changes at the company.

HPE was able to deliver stronger-than-projected quarterly sales mostly thanks to the robust demand for its servers and storage equipment.

It comes as HPE undergoes dramatic change. Its enterprise services business was spun off to CSC last year, and its non-core software assets have now been spun off to Micro Focus in a $8.8bn (£6.7bn) deal, completed last week.

Sales Rise

Despite these dramatic changes, HPE managed to post a fairly decent set of financials.

For the third quarter ending 31 July, HPE posted a net profit of $165m (£126m), which was significantly down from the $2.3bn (£1.8bn) profit it posted in the same year-ago quarter.

But sales rose 2.5 percent to $8.2bn (£6.3bn) from $8bn (£6.1bn) a year earlier. Analysts had been expecting  $7.49bm (£5.7bn), according to Reuters. That expectation came after CEO Meg Whitman had lowered HPE’s projected earnings in June but shares rose as much as 5.8 percent in extended trading after closing in New York.

It is clear that hardware remains a core strength of HPE, as its enterprise group, which includes data centre hardware, posted revenues of $6.8bn (£5.2bn), up 3 percent year over year. This was helped as revenue in the storage business rose 11 percent in the fiscal third quarter.

Server sales however declined declined 1 percent, but thankfully revenue from HPE’s networking business rose 16 percent to compensate for this.

“The results of the third quarter are an encouraging sign of the progress we are making,” said Whitman. “With better execution we drove overall revenue growth, exceeded our EPS targets and improved our operating margins sequentially, all while completing the spin-merge of our Software business. There’s more work to do, but we are on the right track.”

CEO Spotlight

Whitman herself has been under scrutiny of late. She has been in charge of HPE for a number of years now and had been linked to the position of CEO of taxi firm Uber, after the departure of Travis Kalanick.

Despite the speculation, Whitman had ruled herself out of the running, and Expedia chief Dara Khosrowshahi was selected to replace Travis Kalanick.Whitman has also recently stepped down from the board of HP Inc.

HPE meanwhile has also announced that it has acquired consulting firm Cloud Technology Partners.

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