HP Enterprise's profit forecast disappoints Street; shares slip

Hewlett Packard Enterprise Co, the corporate hardware and enterprise software business of Hewlett-Packard Co, forecast a current-quarter adjusted profit largely below analysts' estimates, sending its shares down 1.9 per cent after the bell.

HPE said it expects first-quarter adjusted profit between 42 cents and 46 cents. Analysts on average had expected profit of 46 cents per share according to Thomson Reuters. However, the company did beat analyst estimates for the fourth-quarter ended Oct. 31 by 1 cent with earnings of 61 cents per share, excluding items.

Hewlett Packard Enterprise (HPE) also reported a 7.2 per cent fall in revenue to $12.48 billion in its first year as a stand-alone company, hurt by weak demand for storage and networking equipment. Competition has been stiff as more and more businesses move to the cloud and boost demand for cloud-based services.

This has forced some traditional technology companies such as HPE to change strategies and focus their efforts on fast-growing hardware businesses such as servers, networking and data storage hardware for the cloud. Under Chief Executive Officer Meg Whitman, HPE has sold off most of its software businesses, including its computing services unit, since the company spun off from Hewlett-Packard Co in 2015.

Still, revenue in its enterprise group, the company's biggest business that offers servers, storage and networking services, fell 9.2 per cent to $6.68 billion in the fourth quarter. Larger companies such as Cisco Systems Inc and Dell EMC have well established cloud hardware businesses to compete with HPE.

Networking revenue slumped nearly 34 per cent, hurt in part by a slowdown in spending by the government in educational institutions that hit demand for both wireless and switching devices. Separately, HP Inc, the legacy printing business of Hewlett-Packard Co, forecast an adjusted profit for the current quarter that was largely below analysts' estimates due to waning demand for its printers. HP Inc's shares were down nearly 2.2 per cent after the bell.