HPE’s non-core software assets include its application delivery management, big data, enterprise security, information management and governance and IT operations management businesses.
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HPE CEO Meg Whitman insisted that the deal does not signal the vendor’s exit from the software business, but instead illuminates the company’s blueprint to focus on software that underpins its infrastructure and cloud solutions.
Wednesday announced its plan to spin-off and merge its non-core software operations with Britain’s Micro International PLC in an $8.8 billion deal, as the company continues to streamline its operations.
It formed Hewlett Packard Enterprise to focus on services and products for businesses and other enterprises, and printer/PC maker HP Inc. The combined company will also focus on open source and development. Net income soared to US$2.27 billion, or US$1.32 per share, thanks to a hefty gain on an asset sale.
Separately HPE reported better-than-expected earnings in its fiscal third quarter ended July 31. The adjusted outlook excludes an after-tax gain on the divestiture of Mphasis and other assets of Dollars 0.23, and after-tax costs of USD 0.37 per share for restructuring, separation, amortization of intangible assets, loss from equity interests, acquisition and other related charges and tax indemnification adjustments. The average estimate of 10 analysts surveyed by Zacks Investment Research was for earnings of 45 cents per share.
While EPS of $0.49 beat the Street’s consensus by $0.04, revenue of $12.2 billion missed estimates by $440 million. Revenues for the quarter dropped to $12.21 billion from $13.06 billion a year ago.
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A quick analysis suggests that Micro Focus, which provides software and consultancy services for clients updating legacy systems to more modern platforms, may even be the biggest United Kingdom software company by revenue. On average, analysts surveyed by FactSet expect earnings per share of 61 cents. Additionally, the company updated full-year EPS-guidance to $2.09-$2.14 from $1.85-$1.95 range announced earlier. Shares rose 1.1% in the regular session in the stock market today, at 22.09. HPE shareholders also retained 50 percent ownership of the combined company in that transaction.
