This includes $4.5 million in stock value in the new company, the tranferral of $2.5 billion in debt and other liabilities and $1.5 billion in cash.
Advertisement
Separately, HP Enterprise said fiscal second-quarter profit excluding certain items was 42 cents a share, on revenue of $12.7 billion.
Whitman has been trying to overhaul a once-mighty tech conglomerate since she became chief executive of the old HP in 2011.
“I am a devotee of focus, and this is going to be a laser-focused company”, Whitman said according to the Financial Times.
Hewlett Packard Enterprise has announced that it splitting yet again.
The new company is expected to generate $26 billion in revenue, and realize roughly $1 billion in cost synergies, within the first year.
Shares of Hewlett Packard Enterprise, formed after Hewlett-Packard Co formally split in November, rose 10.5 per cent in extended trading on Tuesday. Shares of Computer Sciences reacted even more strongly to the news, skyrocketing by as much as 34.31% to $47.88 on the news.
Jason Kupferberg, analyst at Jefferies, says the HPE-CSC deal has merit.
“Our proposed merger with HPE Enterprise Services is a logical next step in CSC’s transformation”, Lawrie said.
“When it comes to IT services, it’s about having coverage and global mass”, Jim McGregor said, principal analyst Tirias Research.
The company sold at least 84 percent of its 60.5 percent stake in Indian IT services provider Mphasis Ltd to Blackstone Group (BX.N) for $1.1 billion in April.
Hewlett Packard Enterprise is continuing to slim down by selling its business services division to competitor Computer Sciences Corp. That business was merged with SRA International Inc.
Quocirca analyst Clive Longbottom also tweeted about the news, saying: “CSC and HPE [Enterprise] Services to merge in yet another spin-out”. “The new company will be well positioned to innovate, compete and serve clients”. The deal is expected to close by March 2017 and generate about $1 billion in cost synergies within the first year, noted Rakers, who believes the spin-merger will “leave investors incrementally focused on HPE’s appetite for larger/ strategic acquisitions”. But the company showed progress in the latest quarter, which Ms. Whitman characterized as “very strong”. (NYSE:HPE) shares from Hold to Buy after its quarterly results and the spin-off news. Networking equipment sales increased 57%. Sales of server computers rose 7%, while storage revenue rose 2%.
The company had projected adjusted per-share earnings of 39 cents to 43 cents. That’s higher than the $12.35 billion analysts on average had forecast.
Maria Armental contributed to this article.
Advertisement
Jefferies & Co gave shares of Hewlett Packard Enterprise a price target of 24 indicating a possible upside of 36.56% from Hewlett Packard Enterprise’s existing share price of 17.58. An earlier version of this article incorrectly stated the amount accounted for close to half of the company’s workforce.
