HPQ HP Inc

By Tess Stynes 

Hewlett Packard Enterprise Co. said its earnings fell 52% in the January quarter as negative currency impacts masked underlying revenue growth.

Shares rose 6.9% to $14.54 in recent after-hours trading as per-share earnings, excluding certain one-time items, and revenue beat expectations.

Through the close Thursday, the stock is down about 9% since it started trading Nov. 1, when the Palo Alto, Calif., company separated from personal-computer- and printer-focused HP Inc. HP Enterprise is the biggest maker of computers used in corporate data centers, accounting for nearly a third of global revenue in that business.

Chief Executive Meg Whitman said in prepared remarks Thursday, "We delivered a third consecutive quarter of year-over-year constant currency revenue growth, and excluding the impact of recent [merger] activity, we saw revenue growth in constant currency across every business segment for the first time since 2010."

For the period ended Jan. 31, the company's revenue decreased 2.5% to $12.72 billion. However, excluding currency effects, revenue rose 4%. Analysts polled by Thomson Reuters expected revenue of $12.68 billion.

HP Enterprise and other technology vendors have been trying to meet the challenge posed by the rise of cloud services, which allow companies to run their computing jobs on machines managed by the likes of Amazon.com Inc. The company in October announced plans to wind down its own such service, called Helion Public Cloud, but has been working with Microsoft Corp. in new areas that include offering online programs associated with the software company's Windows 10 operating system.

For the current second quarter, the company forecast per-share earnings of 39 cents to 43 cents. Analysts polled by Thomson Reuters expected per-share profit of 42 cents.

For the first quarter, HP Enterprise reported a profit of $267 million, or 15 cents a share, down from $547 million, or 30 cents a share, a year earlier. The year-ago results assume that the company was independent then.

Excluding restructuring-related charges, costs related to its separation from HP Inc. and other one time items, adjusted per-share earnings fell to 41 cents from 44 cents a year earlier. The company expected adjusted per-share earnings of 37 cents to 41 cents.

The company's enterprise group revenue rose 1% to $7.1 billion. Within that business segment, servers revenue rose fell 1%, but excluding currency effects, improved by 5%. Revenue generated from technical support for computers declined 9%, including a negative currency impact of 6 percentage points.

Sales in the smaller networking gear business sales soared 54%, and grew 62% on a constant-currency basis, buoyed by the $3 billion acquisition last year of wireless equipment maker Aruba Networks.

HP Enterprise also affirmed its annual guidance.

One of the issues that HP Enterprise may address on its conference call is the company's pending $2.3 billion deal to sell a majority stake in its storage, networking and technology services businesses in China to a company affiliated with Tsinghua University.

Write to Tess Stynes at tess.stynes@wsj.com

(END) Dow Jones Newswires

March 03, 2016 17:36 ET (22:36 GMT)

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