Tag Archives: hpe

Hewlett Packard Enterprise Still Wrestles With Cisco, Juniper

One day before Hewlett Packard Enterprise ( HPE ) was slated to post fiscal Q1 earnings, the stock of half of the old computing pioneer Hewlett-Packard Co. was up 4% in afternoon trading in the stock market today . The stock was doing what analysts expect it to do, outperforming the other half of the legacy company,   HP Inc. ( HPQ ), whose shares were up a fraction this afternoon. The stocks, of course, reflect the market’s interpretation of the companies’ operational performance since splitting into two from the legacy corporation in November.  HP, which reported earnings last week, kept the PC and printer businesses — and the old HPQ ticker. Hewlett Packard Enterprise kept the server, storage, networking, enterprise-software and cloud-migration businesses, seen as faster-growing endeavors, and kept the CEO, Meg Whitman, who still chairs both companies. Hardware and equipment-product sales comprise about 38% of Hewlett Packard Enterprise revenue, with services generating the rest. For the quarter ended Jan . 31, analysts polled by Thomson Reuters expect HPE to report earnings down 17% to 40 cents per share on revenue down 2.7% to $12.68 billion, vs. a pro forma 48 cents on $13.03 billion in the 2015 Q1. The company reports after the market close. HP Inc.’s Q1 EPS and sales each fell 12%, to 36 cents and $12.2 billion. For its first fiscal year ending in October, Hewlett Packard Enterprise expects EPS minus items of $1.85-$1.95, up from the $1.84 pro forma earned in 2015, on revenue of $50.81 billion, down 2.5% from the pro forma $52.12 billion of 2015. Analysts have modeled $1.87 and $50.73 billion. “We like HPE because decent execution should be sufficient to move the stock higher,” said UBS analyst Steven Milunovich in a February research note.  “We believe growth in servers, networking and storage, stabilization in high-margin technology services and continued improvement in the Enterprise Services margin should help close the gap between the current P/E of 7x and our target of 10x. “Storage head Manish Goel, as well as a few of our industry sources, say that HPE is taking business from Dell/ EMC ( EMC ) during their proposed merge.  Still, we think it’s time for Meg Whitman to provide a vision for the company. IBM ( IBM ) has cognitive computing.  What does hardware-heavy HPE want to be in 3-5 years and what will be its differentiation?” Nomura doesn’t cover HPE, analyst James Chen advised IBD Wednesday, but he and colleague Jeffrey Kvaal are watching closely as HPE competes with companies that Nomura does cover, such as  Cisco Systems ( CSCO ),  Juniper Networks ( JNPR ) and Arista Networks ( ANET ). Nomura said he expects 3% sales growth for HPE’s enterprise group this fiscal year, compared with Cisco and Juniper’s guidance ranges of 3% to 6%. Hewlett Packard Enterprise’s “projected growth rates are not likely to threaten networking incumbents, but don’t imply much share loss either,” the Nomura analysts said in a research note. HPE’s hybrid cloud business competes with IBM, Microsoft ‘s ( MSFT ) Azure, Amazon ( AMZN ) Web Services and Alphabet ‘s ( GOOGL ) Google Cloud Platform services. Big Data startup  Hortonworks ( HDP ), the Hadoop developer, on Tuesday said it would collaborate with HPE on the use of Apache Spark, making use of shared memory in HPE enterprise environments. UBS analyst Mulinovich, in his February note, said that “upon the split we argued in favor of HPE over HPQ stock. . . .  Hewlett Packard Enterprise has momentum with expected slight revenue growth in constant currency and an improving operating margin in fiscal 2016.” Wednesday afternoon, Hewlett Packard Enterprise stock was 13% off its Dec. 1 record high of 15.88, while HP Inc. was 26% off its record high of 14.82, set Nov. 24.

Google Seen Slashing Cloud Pricing Vs. Amazon, Microsoft

The next round of price cutting in public cloud computing services could come from Alphabet ’s ( GOOGL ) Google, just as Amazon.com and Microsoft show some restraint, says a Goldman Sachs research report. Amazon Web Services (AWS), part of  Amazon.com ( AMZN ) , is the biggest provider of infrastructure as a service (IaaS), where customers rent computer servers and data storage systems via the Internet. Microsoft ( MSFT ) and Alphabet’s Google are the next biggest. The new boss of Google’s cloud business, Diane Greene, will make her debut at that unit’s user conference March 23 to 24, notes the Goldman Sachs report. Greene, a Google board member since January 2012, founded virtualization leader VMware ( VMW ), which she led as CEO until she was forced out in 2008. In November, Google acquired Greene’s startup, Bebop, for $380 million. While AWS has been the biggest IaaS price-cutter of the last decade, Google Cloud Platform (GCP) has been aggressive since moving into the market. Google slashed prices in March 2014, October 2014 and May-June 2015, Goldman analyst Heather Bellini said in the report. “Another 20% to 30% across-the-board price cut from Google in 2016 would not be surprising,” wrote Bellini. “This could be announced as early as their GCP Next conference in San Francisco on March 23-24. Similar to behavior in 2015, we do not expect Amazon and Microsoft to follow suit.” Goldman Sachs says that the top three service providers are gaining share as Verizon Communications ( VZ ), Hewlett Packard Enterprise ( HPE ) and others exit the public IaaS market and focus on private clouds. Goldman Sachs estimates that AWS’ revenue will hit $12.5 billion in 2016, up from $7.88 billion last year. “If AWS surpasses $10 billion in 10 years, it would be the fastest-growing software business,” surpassing Microsoft, Oracle ( ORCL ), and SAP ( SAP ),” Bellini wrote.

Ruckus Bulls Expect Upside From Cable Wi-Fi, OpenG Initiative

Ruckus Wireless ( RKUS ) could get a boost from increased spending on public Wi-Fi networks by cable TV companies as well as its push into a new market — LTE wireless data services that use high-frequency 3.5 GHz spectrum, say analysts. Ruckus, a maker of Wi-Fi networking gear, competes with Cisco Systems ( CSCO ), Hewlett Packard Enterprise ( HPE ), Aerohive Networks ( HIVE ) and others. Ruckus stock was up a fraction in midday trading on the stock market today , near 9.75, but it’s down 9% this year after falling nearly 11% last year, amid a slowdown in education spending on wireless networks. Ruckus has a IBD Composite Rating of 70, where 99 is highest. Ruckus stock touched an all-time low of 7.25 on Feb. 10. On Friday, BTIG analyst Walt Piecyk initiated coverage on Ruckus with a buy rating. “We expect Ruckus to generate 16% revenue growth in 2016, an acceleration from last year’s 14% growth rate,” wrote Piecyk. “We expect 2017 revenue growth of 16% but note that if a cable operator were to initiate a new investment program, Ruckus would have the opportunity to accelerate the top line.” Ruckus sells Wi-Fi gear to the enterprise market — big corporate, government, education and health system customers. One concern among analysts is its exposure to China’s telecom market. In late 2017, Ruckus could get a lift from a new product cycle, says Jason Ader, an analyst at William Blair. Ruckus is targeting in-building wireless networks that use 3.5 GHz spectrum, using a technology called OpenG. Ruckus is working on OpenG with Qualcomm ( QCOM ), Nokia ( NOK ) and Alphabet ’s ( GOOGL ) Google. “Ruckus management is confident in driving adoption of OpenG over time and expects revenue impact in the second half of 2017,” wrote Ader in a research report. “We view the in-building cellular opportunity as an excellent strategic fit with Ruckus’ existing business and a material growth catalyst longer term, especially as the Wi-Fi market matures.”