Hewlett Packard Enterprise (HPE) shares were up roughly 2 percent in after-hours trading today following fourth-quarter earnings that mildly exceeded analysts’ expectations and included a surprise mention of Microsoft Azure.
This earnings report was significant, being the final one for the combined Hewlett-Packard Co. HP officially separated into Hewlett Packard Enterprise and HP Inc. on Nov. 1, but on Tuesday’s conference call, executives provided guidance on combined earnings, as well as breakouts for each new company.
HPE, led by CEO Meg Whitman and comprised of HP’s enterprise, cloud, and server segments, reaffirmed its forecast for 2016 profits to be $1.85 to $1.95 per share, non-GAAP. Analysts had expected $1.88 per share.
HPE expects first quarter non-GAAP earnings to be 37 to 41 cents per share.
“This split was executed nearly flawlessly, and it’s a credit to the team across the globe,” Whitman said on the conference call.
HPE’s business segments posted $14.1 billion in combined fourth-quarter revenues, which was down 4 percent from the same period a year ago. Whitman said revenues would have been up 3 percent if not for currency effects. Analysts had expected HPE to post pro forma fourth-quarter revenue of $13.5 million.
Among HPE’s sectors, the enterprise group saw revenues increase 2 percent year-over-year to $7.4 billion, while server revenues increased 5 percent. HPE’s networking revenue increased 35 percent.
Whitman said that the segments that comprise HPE have now had two consecutive quarters of constant-currency growth and that HPE was in a strong position next year to meet its goals (in constant currency).
She also said that HPE benefited from IBM’s decision to sell its server business to Lenovo and that HPE wants to aggressively take advantage of any uncertainty that the Dell/EMC merger could create in the marketplace.
Whitman said she was confident that HPE’s deal to sell some of its assets to Tsinghua Holdings, due to close in the first quarter, would help its bottom line and give it an inroad into China.
Finally, Whitman announced that HPE has chosen to make Microsoft Azure a preferred public cloud provider. HP recently decommissioned its Helion Public Cloud, originally saying it would use both Azure and Amazon Web Services (AWS) as public-cloud options.
For HP as a whole, the combined entity earned 93 cents per share minus items in the fourth quarter that ended Oct. 31. Revenue was $25.7 billion, which was down 9 percent. Analysts polled by Thomson Reuters had projected 97 cents per share on revenues of $26.36 billion.
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