Hewlett Packard Enterprise Co. capped its first year as an independent company by posting lower quarterly profit and revenue, the latest evidence that corporate technology demand remains tepid.
The company, one of two created by the breakup of Hewlett-Packard Co. a year ago, said net income in its fourth fiscal quarter fell 78% on a 7.2% revenue decline.
HP Enterprise also projected earnings for the current quarter that were mostly below projections on Wall Street.
HP Enterprise, based in Palo Alto, Calif., now sells a broad line of hardware, software and services aimed at corporate buyers. But Chief Executive Meg Whitman, who pushed for the breakup, has moved aggressively to dispense with major businesses to focus on servers, networking and data storage hardware.
In May, for example, HP Enterprise agreed to spin off a 100,000-employee computing services business and merge it with operations of Computer Sciences Corp. In September, the company announced plans for an $8.8 billion deal to spin off and merge most of its software operations with Britain's Micro Focus International PLC.
Ms. Whitman's strategy to narrow her company's focus runs counter to the path forged by longtime rival Dell Inc., which in September became substantially larger by completing the largest acquisition in high-tech history?buying data storage pioneer EMC Corp. for $60 billion.
The increased emphasis on data center hardware comesas demand for some product categories has been weak lately. Rival Cisco Systems Inc. last week reported that sales of its flagship switching systems declined 7%, while sales in the unit that includes servers slid 3%.
HP Enterprise said server revenue declined 7% in the fourth quarter. Storage revenue fell 5%, while networking revenue declined 34%.
While boosting revenue growth has been an uphill battle, HP Enterprise's stock has risen 50% in 2016 because of moves to share its steady cash flow with investors through dividends and stock buybacks. The company said its cash flow from operations rose 44% to $2.2 billion in the fourth quarter.
"During our first year as a stand-alone company, HPE delivered the business performance we promised," Ms. Whitman said.
HP Enterprise reported net income for the fourth period ended Oct. 31 of $302 million, or 18 cents a share, compared with profit in the year-earlier period of $1.39 billion, or 75 cents a share. Revenue declined to $12.48 billion from $13.45 billion.
On an adjusted basis that excludes restructuring charges and other one-time items, HP Enterprise put fourth-quarter earnings per share of 61 cents. The company in September had projected a range of 58 cents to 63 cents a share, while analysts polled by FactSet had predicted per-share profit of 60 cents on revenue of $12.79 billion.
Fur the current quarter, HP Enterprise said it expects to report adjusted earnings per share of 42 cents to 46 cents. Analysts' average estimate was 46 cents, according to FactSet.
HP Enterprise met a prior estimate that it would report adjusted per-share earnings for fiscal 2016 of $1.90 to $1.95, landing the figure at $1.92. It also reaffirmed a prediction in October that per-share earnings for fiscal 2017 will be $2.00 to $2.10, excluding the impact of pending divestitures.
Write to Don Clark at email@example.com
(END) Dow JonesNewswires
November 22, 2016 16:55 ET (21:55 GMT)
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