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Categorized | Currencies

HP Enterprise sales fall more than expected as US dollar weighs

Posted on November 22, 2016

Hewlett Packard Enterprise suffered a bigger revenue slip than expected in its latest quarter, though the decline did little to dent Wall Street’s revived interest in the company’s stock as it prepares to spin off large parts of its business.

The business computing company carved out by the break-up of the former Hewlett-Packard a year ago said its revenues slipped by 7 per cent in the three months to the end of October to $12.5bn, compared to analysts’ forecasts of $12.8bn. The decline owed much to the strengthening dollar, which HP blamed for five percentage points of the fall.

Despite that, HP still managed to meet earnings expectations for its non-GAAP earnings, thanks in part to cuts in R&D and general administrative costs. Pro forma earnings of 61 cents a share were up from 55 cents a share the year before.

The progress HPE has made in its cost-cutting helped to moderate the fall in its shares on the news, with the stock slipping around 1 per cent in after-market trading. The shares are still up around a third since last-year’s break-up, thanks largely to plans to spin off the company’s services and software divisions and merge them with other industry players.

Based on formal accounting principles, HPE’s profits fell sharply. Its non-GAAP calculation excluded a range of costs stemming from restructuring, tax settlements and other causes. These totalled $733m, or 43 cents a share, and left its official, after-tax profits at $302m, or 18 cents a share, down from $1.4bn, or 75 cents a share, the year before.

In a press release announcing the results, Meg Whitman, HPE’s chief executive officer, claimed success in the company’s first year, and maintained that it was being “transformed through strategic changes designed to enable even better financial performance.”