eWEEK content and product recommendations are editorially independent. We may make money when you click on links to our partners. Learn More.
The split-up versions of what was the iconic Hewlett-Packard Co. for 76 years (from 1939 to 2015) turned in their Q4 and fiscal year 2016 earnings reports Nov. 22, marking the first 12 months that they’ve been separate.
HP Enterprise’s (known as HPE) fiscal Q4 2016 earnings beat Wall Street estimates, but revenue came in lower than analysts expected. The IT software, hardware and services maker said its earnings were up 17 percent to 61 cents per share in Q4, but revenue, after adjustments for divestitures and currency exchanges, dropped 7 percent to $12.5 billion.
Thomson Reuters’ poll of analysts had come up with a projection of $12.8 billion in revenue.
In fiscal year 2016, HPE totaled $50.1 billion in revenue, down 4 percent from the previous year, and $7.6 billion net cash.
Surprising Rise in Revenue for HPQ
HP Inc. (known as HPQ), the printer and laptop business, saw a surprising 2 percent quarterly rise in revenue to $12.51 billion, exceeding analysts’ average estimate of $11.9 billion. This rebound came in the face of flat global sales of laptop and desktop personal computers, and it counterbalanced the company’s PC division against continuing problems for its printer business.
However, HPQ’s quarterly profit fell to $492 million (28 cents per share) from $1.32 billion, or 73 cents per share, a year ago. This 63 percent net income decrease was due in part to costs of one-time payments to company retirees, the company said.
Revenue from HPQ’s printer business fell sharply by 8.2 percent in the fourth quarter from a year earlier. Seeing the weakness in the market, HP announced two months ago that it would acquire Samsung Electronics’ printer business for $1.05 billion to gain both market share and new manufacturing capability.
HPQ’s performance in the laptop business are impressive, indeed, when compared to the global market in general. Gartner Research has estimated that HP’s share of Q3 2016 PC shipments—which dropped about 6 percent for all other suppliers in the period—rose to 20.4 percent from 18.8 percent in the year-earlier period for HP’s brand. HP reported Nov. 22 that unit shipments rose 5 percent and that PC revenue was up 4 percent.
For the fiscal year 2016, HPQ totaled $48.2 billion in revenue, down 6 percent from the previous year, and $3.2 billion in net cash profit.
HPE’s Whitman Speaks
“During our first year as a stand-alone company, HPE delivered the business performance we promised, fulfilled our commitment to introduce groundbreaking innovation, and began to transform the company through strategic changes designed to enable even better financial performance,” HPE CEO Meg Whitman said in a press statement.
HPE announced last May that it would spin off and merge its enterprise-services division with Computer Sciences Corp. (CSC). In September, HPE then said it would spin off its software business and merge it with U.K.-based Micro Focus International.
HPE’s stock was down 1.4 percent in after-hours trading, after the earnings release. Shares fell 1.1 percent to $22.85 in the Nov. 22 regular session after hitting a high of $23.85 on Nov. 18.
Outlook for HPE Servers, Storage
Krista Macomber, Senior Analyst at Technology Business Research Inc., said in a media advisory that HPE closed its first 12 months operating as a stand-alone company in a period of ongoing transformation as data centers become refurbished using software and hardware from numerous vendors.
“Customers’ migrations to hybrid environments of disruptive new data center architectures, including hyperconverged platforms, and IT resources delivered “as-a-Service” accelerated during the year,” Macomber said.
“TBR believes that HPE will remain the globe’s largest server vendor for the foreseeable future, but TBR’s Data Center Server and Storage Market Forecast 2015-2020 indicates that HPE will endure some market share attrition during the next three to five years,” Macomber said.
Macomber also said that HPE “will continue to gain storage market share moving forward, but gains will be somewhat muted as its pending spin-merges of many software and services assets add a degree of go-to-market complexity and ecosystem confusion.
“HPE will reduce the impact of this risk on its business by building out and messag[ing] its know-how in software-driven areas such as data protection, application acceleration–perhaps with the support of select acquisitions for niche IP and market consolidation.”