Hewlett-Packard Enterprise Profit Beat Estimates, But Hurt By Negative Currency
The enterprise business service from Hewlett-Packard, Hewlett-Packard Enterprise reported its quarterly result on Thursday. Although the earning fell by negative currency impacts but the company booked a better than expected revenue and profit.
Hewlett-Packard Enterprise is one of Hewlett-Packard companies which split its business into two separate companies. Hewlett-Packard decided to separate its personal computer and printer business from its technology services, which finalized in October 2014. The two publicly-traded companies are Hewlett-Packard Inc. which operates personal computer and printer business, and Hewlett-Packard Enterprise as technology service company.
Hewlett-Packard Enterprise has four divisions: enterprise group, enterprise services, software, and financial services. All four of them are focusing on the enterprise level technology service, with enterprise group as core service.
On Thursday, the company reported its revenue in the first quarter ended in January were at $12.72 billion, fall from $13.05 billion in the previous quarter. The revenue earned the company 41 cents per share. Although its revenue fell, but it beat analysts estimation which forecasted of $12.68 billion revenue and 40 cents per share.
Reuters reported that enterprise group business, which generates more than half of its total revenue increased 1% to $7.1 billion from last year's result. Hewlett-Packard Enterprise also keep its adjusted profit forecast in 2016 at $1.85-$1.95 per share. Following the result, the company's share were up 6.4% to $14.47 in extended trading.
CEO Meg Whitman said in a statement as quoted by CNBC, "During our first quarter as an independent company, we saw the progress that comes from being more focused and nimble." She also said, "We delivered a third consecutive quarter of year-over-year constant currency revenue growth, and excluding the impact of recent M&A activity, we saw revenue growth in constant currency across every business segment for the first time since 2010."
Fox Business reported that rise of cloud services poses a challenge for HP Enterprise and other enterprise technology vendors. Cloud services allow companies to run their computing needs on the cloud servers, without purchasing servers and computing infrastructures. As an effot to focus on its core strength, HP shut down its cloud service last October and cooperated with Microsoft in providing online programs for Windows 10 operating system and other technology services.
Corporate technology vendors were facing fluctuation since the beginning of 2016, as a result of market turmoil. Currency factors were weigh on HP Enterprise revenue along with customers withhold the purchase. CEO Whitman affirmed that HP Enterprise had acknowledged the pattern in January, but she said business began to elevate starting February.
Although its quarterly result beat the estimation, but HP Enterprise business was slowing down in the first quarter ended in January. Nevertheless, the company's share was up, showing investors' confidence to company's performance.