Tag Archives: hpe

AT&T Leads In Private Cloud, OpenStack Software: Goldman Sachs

AT&T ( T ) will likely be the biggest user of OpenStack cloud computing software worldwide, says a Goldman Sachs report on growth in private clouds. “AT&T will likely become the largest OpenStack environment in the world, as they expect to build out their private cloud to 500,000 nodes (servers) and span across hundreds of data centers,” said Heather Bellini, a Goldman Sachs analyst, in a research report. AT&T and Verizon Communications ( VZ ) in January joined Facebook ’s ( FB ) Open Compute Project , which helps companies design and build low-cost data centers with open-source software. Behind VMware ( VMW ) and Microsoft ( MSFT ), OpenStack is the third-most-popular software technology for private clouds  —  data centers that operate behind a corporate security firewall. OpenStack helps corporate IT departments manage data centers packed with computer servers. Rackspace Hosting ( RAX ) and government space agency NASA co-developed OpenStack in 2010, aiming to make the software a cloud computing standard. Many companies now back OpenStack, including Hewlett Packard Enterprise ( HPE ), Red Hat ( RHT ), Intel ( INTC ), IBM ( IBM ), Cisco Systems ( CSCO ) and Dell. AT&T plans to transform its massive network by 2020 — with software running on standard computing gear replacing specialized hardware. “AT&T hopes to run every call through its OpenStack infrastructure by 2020,” said the Goldman Sachs report. “The company believes it can take out  billions of dollars in capital spending and operating expenses from moving to private cloud as they can use commodity pizza boxes instead of proprietary Cisco boxes. The entire infrastructure will be automated, helping AT&T operate at a faster pace and bring in new services, which is easier to do when they are software-based.” AT&T is using OpenStack software provided by startup Mirantis, says Goldman Sachs. It says Verizon is also a Mirantis customer. Privately held Mirantis, based in Sunnyvale, Calif., says its investors include the venture capital arms of Intel, Ericsson ( ERIC ), Dell and Goldman Sachs ( GS ). Goldman Sachs says Red Hat and VMware are the leading providers of OpenStack software for private clouds. Image provided by Shutterstock .

Crowded Stocks Apple, Alphabet, Microsoft Still A Buy: Bernstein

Alphabet, Facebook, Intel, Amazon.com and Apple ( AAPL ) rank among the most “crowded” technology and telecom stocks globally, says a Sanford Bernstein research report, which notes that Hewlett Packard Enterprise and Sprint are among the least-crowded large-cap stocks. The Bernstein report says investors should keep in mind what stocks are “crowded,” or highly concentrated, amid market volatility. Still, being among the most crowded doesn’t rule out a favorable stock rating for a stock. So-called crowded stocks are often called growth and momentum stocks. And high institutional ownership is usually a good thing, as IBD’s Investor’s Corner can tell you. “We believe it’s important for investors to include ‘crowding’ as a consideration for their portfolio strategy, especially for technology (which is very crowded), to improve diversification, mitigate downside risk and potentially enhance returns,” said Bernstein analyst Mark Moerdler in the report. The worry with heavily owned stocks is that, given high valuations and high growth expectations, they might take a hit if investors exit the stock market during a broad sell-off. Other analysts at Bernstein rate Alphabet ( GOOGL ) and Amazon ( AMZN ) stocks as a buy, Facebook ( FB ) neutral and Apple outperform, even though Apple also is on the crowded list. Intel ( INTC ) has a hold rating from Bernstein, while Microsoft ( MSFT ) has a buy. On Apple, Moerdler wrote: “The stock has underperformed over the last quarter due to fears of iPhone weakness, which we believe is now largely priced into the stock.” Microsoft “has become increasingly crowded over the last few quarters as investors and sell-side analysts have come to realize the massive opportunity for Microsoft to grow long-term EPS as the company moves to cloud and subscription revenue,” Moerdler said. Among software stocks, he says, “companies that have greater exposure to cloud and recurring revenue (are) showing the most crowding.” According to Moerdler: “Crowded stocks react less positively to good news than un-crowded stocks, but overreact negatively to bad news more so than un-crowded stocks.” Sprint ( S ) and Hewlett Packard Enterprise ( HPE ) have  market perform ratings at Bernstein Research.

HPE Stock Beats HPQ In 1st Quarter Since Splitting Hewlett-Packard

Having just completed their first quarter since the Nov. 1 split of their former parent company, the stock of Hewlett Packard Enterprise , the Big Data and hybrid cloud operations of the old Hewlett-Packard Co., has outperformed its sibling HP Inc. , which retained the legacy personal computer and printer business. The new Hewlett Packard Enterprise ( HPE ) fell 2.5% in the stock market today , to 13.45. True, that’s 15% off its all-time set Dec. 1 at 15.88, but HP Inc. ( HPQ ) is trading 33% below its post-Nov. 1 high of 14.82, touched Nov. 24. It fell 0.9% to 9.88 on Tuesday. “Upon the split we argued in favor of HPE over HPQ stock,” wrote UBS analyst Steven Milunovich in a research note Tuesday. “Hewlett Packard Enterprise has momentum with expected slight revenue growth in constant currency and an improving operating margin in fiscal 2016. This outlook was reinforced on the last earnings call (Nov. 25). “In contrast, HP Inc. told investors it would be investing for long-term gain. Our initial issue was the unsustainability of printer margins, but then unit demand fell apart last quarter. We remain concerned that HPQ estimates could be too high.” For the fiscal first quarter ended Jan . 31, analysts polled by Thomson Reuters expect the Enterprise company 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. Analysts expect the performance of HP Inc., the PC/printer company, to slide further than Enterprise, with Q1 earnings down to 36 cents on falling sales to $12.23 billion. For fiscal 2016 ending Oct. 31, the Enterprise company expects earnings of $1.85-$1.95 per share minus items, vs. the $1.84 pro forma earned in 2015.  It guided revenue to $50.81 billion, down from the pro forma $52.12 billion of 2015. Analysts expect 2016 EPS of $1.87 minus items on revenue of $50.68 billion. Hewlett Packard Enterprise and analysts expect profitability and sales to improve in 2017 and beyond. Reiterating a buy rating and 18.50 price target on Enterprise, Milunovich said: “HPQ is slightly less expensive than HPE on all measures, but we prefer HPE’s better earnings momentum. Even discounting HPE’s segment P/Es by 20%-30% relative to comps results in an overall multiple of almost 10x and a price target of $18.50. The stock looks more expensive on current but inexpensive on normalized free cash, which we expect to be achieved in fiscal 2018.” UBS rates HP Inc. as neutral with a 15 price target. Meg Whitman, who remains chair of both companies, took the CEO title of Hewlett Packard Enterprise as she had with the former company, but named Dion Weisler CEO of HP Inc. Both companies are expected to report fiscal Q1 earnings this month.