Hewlett Packard Enterprise is continuing to slim down by selling its business services division to competitor Computer Sciences Corp.
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Separately, HP Enterprise said fiscal second-quarter profit excluding certain items was 42 cents a share, on revenue of $12.7 billion.
This is breaking news. Analysts polled by Thomson Reuters expect the company to report earnings of $0.48 per share for the third-quarter.
Hewlett Packard Enterprise (NYSE:HPE) started the day trading at $15.88 and exhibited higher shift of +1.26% while the stock’s buy and sell trade closed at $ 16.07. Now the stock has been rated as “Buy” from 10 Analysts.
HP Enterprise posted a better-than-expected 1.3% increase in revenue, while Computer Sciences said revenue fell 5.4% to $1.8 billion. Shares of CSC are higher by $2.85, or 8%, at $38.50.
Goldman Sachs & Co is serving as financial adviser to HPE, while RBC Capital Markets is serving as financial adviser to CSC.
HPE wasn’t under any pressure from activists or its board for the split-merger, but there was intense competitive pressure, said Jim McGregor, principal analyst with Tirias Research. “When it comes to IT services, it’s about having coverage and global mass”, McGregor said.
With the acquisition of EMC by Dell, it’s clear that today “it’s all about buiking up to be a major, worldwide supplier”, said McGregor.
Hewlett Packard Enterprise Company (Hewlett Packard Enterprise) is engaged in offering information technology (IT) and enterprise services solutions.
For the period ended April 30, HP Enterprise reported a profit of $320 million, or 18 cents a share, up from $305 million, or 16 cents a share, a year earlier.
CA, Inc.’s (CA) EPS growth ratio for the past five years was 2.20% while Sales growth for the past five years was -1.90%.
The spin-merger indicates HPE will concentrate more deeply on helping corporate customers transform to cloud-based services, and protect its business in security- and data driven-related services, says Tom Bittman, an analyst at market researcher Gartner. Additionally, Mike Nefkens, the current EVP and GM of HPE’s Enterprise Services business, will be a key part of the new company’s executive team and partner closely with Lawrie on building the new organization.
“I think we can move upstream with our services and get better position in accounts since we won’t be competing with HPE Services”, Haffar said. Many of those markets have been hurt by cloud services adoption. “The kind of services they are letting go are helped through scale”.
Moorhead added Whitman has HPE headed in the right direction: Its first quarter financial performance marked an improvement in every business segment for the first time since the fourth quarter of 2010. “Synergy is absolutely spot on”, he said.
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Contributing: Elizabeth Weise in San Francisco.
