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Hewlett Packard Enterprise Jumps 15% As Earnings Edge Views

Hewlett Packard Enterprise ( HPE ) stock rocketed 15% in morning trading on the stock market today . Late Thursday HPE edged above earnings-per-share expectations for its fiscal Q1 ended Jan. 31, met on revenue and roughly met views with its Q2 earnings guidance, while also promising to return more capital to shareholders. For Q1, the company posted EPS ex items of 41 cents, down 6.8% from pro forma earnings of 44 cents a share in the year-earlier quarter. Sales fell 3% to $12.7 billion. For Q2, HPE expects EPS ex items of 39 cents to 43 cents. It didn’t give revenue guidance. “All in all, the headline news looks like a solid report from a top/bottom-line perspective,” Daniel Morgan, a vice president of HPE shareholder Synovus Trust, told IBD via email. On Wednesday, the company filed with the SEC to change its pro forma figures for the year-earlier quarter, which it issued after its Nov. 1 split from the legacy Silicon Valley pioneer Hewlett-Packard Co. HPE contains the business software and services, servers, storage and cloud-migration operations of the old company, with the new HP Inc. ( HPQ ) taking the PC and printer business. HPE now has more freedom to battle broad-based business-technology providers such as IBM ( IBM ), Cisco Systems ( CSCO ) and Oracle ( ORCL ). HPE changed its year-earlier figure for EPS minus items to 44 cents, from 48 cents. It didn’t change its pro forma revenue figure. Analysts polled by Thomson Reuters had expected adjusted EPS of 40 cents for fiscal Q1, though it’s unclear if that consensus estimate would have changed with the new pro forma figure. Analysts expected revenue of $12.68 billion. For Q2, analysts had modeled EPS ex items of 42 cents on sales of $12.3 billion. The company’s fiscal 2016 EPS ex items guidance of $1.85 to $1.95 met the views of analysts polled by Thomson Reuters. And HPE maintained its fiscal 2016 guidance on free cash flow — cash from operations minus capital expenditures — of $2 billion to $2.2 billion. HPE shares fell 2.2% to 13.60 Thursday. The stock, which debuted in early November, peaked Dec. 1 at 15.88. Looking for ways to speed growth and improve shareholder value, the Hewlett-Packard split came in the face of faster-growing competition from upstarts leading the way to cloud computing. Last week, HP Inc. said its Q1 EPS and sales each fell 12%, to 36 cents and $12.2 billion. HPE Says Sales In Constant Currency Rose For All Segments “During our first quarter as an independent company, we saw the progress that comes from being more focused and nimble,” HPE CEO Meg Whitman said in the company’s earnings release. Whitman also serves as chair of HP Inc. and had been CEO and chairwoman of the former Hewlett-Packard Co. before engineering the split-up. “We delivered a third consecutive quarter of year-over-year constant-current revenue growth, and excluding the impact of recent M&A activity, we saw revenue growth in constant currency across every business segment for the first time since 2010,” she said. Revenue rose 4% year over year in constant currency, the company said. HPE CFO Tim Stonesifer said in the earnings release that the company will “return at least 100% of our free cash flow outlook to shareholders” in fiscal 2016, after devoting $1.3 billion to share repurchases and dividends in Q1. The networking business was the clear winner last quarter, and in fact the only business that notched revenue growth. The company said its Enterprise Group overall rose 1% to $7.1 billion in revenue, with a 13.4% operating margin. Networking sales jumped 54% from the year-earlier quarter — more than 60% in constant currency — but storage revenue fell 3%, and tech services tumbled 9%. Also slipping were server sales, albeit by just 1%. Before the release, shareholder Morgan, of Synovus Trust, told IBD he was “looking for stabilization in areas of weakness (by) expecting strength in servers into next year, as cloud and Big Data growth spur purchases. Servers represents 48% of the Enterprise (Group) segment’s revenue and was (up) 5% year-to-year last quarter.” HPE’s separate Enterprise Services segment sales fell 6% to $4.7 billion, the company said. Infrastructure tech outsourcing sales fell 8%, while application and business services revenue slipped 3%. Software services fell 10% to $780 million. License revenue fell 6%, support fell 13%, professional services revenue contracted 7%, and software as a service (Saas) sales fell 9%. Financial services, which help customers pay for their purchases, fell 3% to $776 million. In its filing with the SEC on Wednesday, the company said the main differences with its new pro forma EPS number for the year-earlier quarter “are related to cash acquired and debt incurred by HPE just prior to the distribution (of new shares to old shareholders). The primary differences between the previously provided figures and adjusted cash flow from operations and adjusted free cash flow are related to prepaids, deposits and liabilities associated with property, plant and equipment, pension obligations and income tax asset and liabilities that transferred to HPE from its former parent just prior to the distribution.”

Hewlett Packard Enterprise Edges EPS Views, Outlook Meets, Stock Up

Hewlett Packard Enterprise ( HPE ) late Thursday edged above earnings-per-share expectations for its fiscal Q1 ended Jan. 31, met on revenue and roughly met views with its Q2 earnings guidance, while also promising to return more capital to shareholders. For Q1, the company posted EPS ex items of 41 cents, down 6.8% from pro forma earnings of 44 cents a share in the year-earlier quarter. Sales fell 3% to $12.7 billion. For Q2, HPE expects EPS ex items of 39 cents to 43 cents. It didn’t give revenue guidance. “All in all, the headline news looks like a solid report from a top/bottom-line perspective,” Daniel Morgan, a vice president of HPE shareholder Synovus Trust, told IBD via email. On Wednesday, the company filed with the SEC to change its pro forma figures for the year-earlier quarter, which it issued after its Nov. 1 split from the legacy Silicon Valley pioneer Hewlett-Packard Co. HPE contains the business software and services, servers, storage and cloud-migration operations of the old company, with the new HP Inc. ( HPQ ) taking the PC and printer business. HPE now has more freedom to battle broad-based business-technology providers such as IBM ( IBM ), Cisco Systems ( CSCO ) and Oracle ( ORCL ). HPE changed its year-earlier figure for EPS minus items to 44 cents, from 48 cents. It didn’t change its pro forma revenue figure. Analysts polled by Thomson Reuters had expected adjusted EPS of 40 cents for fiscal Q1, though it’s unclear if that consensus estimate would have changed with the new pro forma figure. Analysts expected revenue of $12.68 billion. For Q2, analysts had modeled EPS ex items of 42 cents on sales of $12.3 billion. The company’s fiscal 2016 EPS ex items guidance of $1.85 to $1.95 met the views of analysts polled by Thomson Reuters. And HPE maintained its fiscal 2016 guidance on free cash flow — cash from operations minus capital expenditures — of $2 billion to $2.2 billion. HPE stock was up nearly 7% in after-hours trading, following the earnings release. Shares fell 2.2% to 13.60 in the regular session on the stock market today . The stock, which debuted in early November, peaked Dec. 1 at 15.88. Looking for ways to speed growth and improve shareholder value, the Hewlett-Packard split came in the face of faster-growing competition from upstarts leading the way to cloud computing. Last week, HP Inc. said its Q1 EPS and sales each fell 12%, to 36 cents and $12.2 billion. HPE Says Sales In Constant Currency Rose For All Segments “During our first quarter as an independent company, we saw the progress that comes from being more focused and nimble,” HPE CEO Meg Whitman said in the company’s earnings release. Whitman also serves as chair of HP Inc. and had been CEO and chairwoman of the former Hewlett-Packard Co. before engineering the split-up. “We delivered a third consecutive quarter of year-over-year constant-current revenue growth, and excluding the impact of recent M&A activity, we saw revenue growth in constant currency across every business segment for the first time since 2010,” she said. Revenue rose 4% year over year in constant currency, the company said. HPE CFO Tim Stonesifer said in the earnings release that the company will “return at least 100% of our free cash flow outlook to shareholders” in fiscal 2016, after devoting $1.3 billion to share repurchases and dividends in Q1. The networking business was the clear winner last quarter, and in fact the only business that notched revenue growth. The company said its Enterprise Group overall rose 1% to $7.1 billion in revenue, with a 13.4% operating margin. Networking sales jumped 54% from the year-earlier quarter — more than 60% in constant currency — but storage revenue fell 3%, and tech services tumbled 9%. Also slipping were server sales, albeit by just 1%. Before the release, shareholder Morgan, of Synovus Trust, told IBD he was “looking for stabilization in areas of weakness (by) expecting strength in servers into next year, as cloud and Big Data growth spur purchases. Servers represents 48% of the Enterprise (Group) segment’s revenue and was (up) 5% year-to-year last quarter.” HPE’s separate Enterprise Services segment sales fell 6% to $4.7 billion, the company said. Infrastructure tech outsourcing sales fell 8%, while application and business services revenue slipped 3%. Software services fell 10% to $780 million. License revenue fell 6%, support fell 13%, professional services revenue contracted 7%, and software as a service (Saas) sales fell 9%. Financial services, which help customers pay for their purchases, fell 3% to $776 million. In its filing with the SEC on Wednesday, the company said the main differences with its new pro forma EPS number for the year-earlier quarter “are related to cash acquired and debt incurred by HPE just prior to the distribution (of new shares to old shareholders). The primary differences between the previously provided figures and adjusted cash flow from operations and adjusted free cash flow are related to prepaids, deposits and liabilities associated with property, plant and equipment, pension obligations and income tax asset and liabilities that transferred to HPE from its former parent just prior to the distribution.”

Ciena Sinks On Q1 Sales Miss, Dragging Fiber Optics Stocks Down

Fiber optic network and switch designer Ciena ( CIEN ) issued fiscal Q1 earnings early Thursday that beat Wall Street consensus, but its sales missed lowered estimates, as did its sales outlook, and shares plunged to a 15-month low. “Macro strikes again,” Nomura analyst Jeffrey Kvaal said in a research note after the earnings release, citing “recent volatility in the macro environment,” notably weak spending in European, Middle Eastern and African markets. Ciena stock was down 19%, below 17, in early afternoon trading in the stock market today . Shares are more than 35% off a two-year high of 26.50 touched last July. Ciena designs ethernet transport/switching systems used in network infrastructure by telecom and cable service providers. Infinera ( INFN ), Finisar ( FNSR ) and sector giant Cisco Systems ( CSCO ) work in similar or related spaces. Ciena dragged its entire IBD Telecom-Fiber Optics industry group down 4% by early afternoon, with Infinera down 8%. Finisar stock was down 1% and Cisco down a fraction Thursday afternoon. In December, Ciena had guided to revenue of $555 million to $590 million for its fiscal first quarter ended Jan. 31. It didn’t give EPS guidance. At the time, analysts had modeled EPS ex items of 28 cents on revenue of $638 million, but analysts polled by Thomson Reuters subsequently lowered their estimates to 14 cents and $576.3 million. So while Ciena beat on EPS, reporting 18 cents ex items, it beat only the scaled-back expectations, while Q1 revenue of $573.1 million missed even Wall Street’s revised estimate. Analysts expect the current Q2 ending in April to produce 31 cents per share ex items on revenue of $643.4 million, but Ciena forecast $630 million at the midpoint of its guidance range. Ciena guided Q2 gross margins to the mid-40s percentile, with analyst consensus at 44.9%, while operating expenditures of about $225 million “implies (an) operating margin of about 9.3% vs. consensus of 10.3%,” said Nomura’s Kvaal. “Despite some recent volatility in the broader macroeconomic environment, the demand drivers for our business remain firmly in place, and we are well positioned to translate our market leadership into continued growth and profitability this fiscal year,” Ciena CEO Gary Smith said in the earnings release.