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HP Enterprise (HPE) Beats Q3 Earnings, Plans $8.8B Software Merger with Micro Focus

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Hewlett Packard Enterprise Co. (HPE - Free Report) just released its third quarter fiscal 2016 earnings results, posting earnings of 49 cents per share and revenue of $12.2 billion. 

Currently, HPE has a Zacks Rank #3 (Hold). HPE was down over 2.5% to $21.50 in after-hours trading shortly after its earnings report was released.                                                 

Beat earnings estimates. The company posted non-GAAP diluted net earnings of 49 cents per share, surpassing the Zacks Consensus Estimate of 44 cents per share. This number excludes 83 cents from non-recurring items.

Missed revenue estimates. The company saw revenue figures of $12.2 billion, lagging behind our consensus estimate of $12.588 billion and declining 6% year-over-year.

Reported third-quarter cash flow from operation of $1.7 billion, up 10% from the year ago quarter.

Announced plans for a spin-off and merger of its non-core software assets with Micro Focus in a transaction valued at approximately $8.8 billion. 

"Today's announced spin-merge of our non-core software assets with Micro Focus is another important step in our strategy to unlock a faster growing, higher margin, stronger cash flow company," said President and CEO Meg Whitman. "As we said in the Enterprise Services announcement last quarter, both software and services remain key enablers of our go-forward strategy, and we are focused on building the right portfolio to win in our target markets. We believe the portfolio changes we've made over the past year are setting up HPE for long-term success while unlocking tremendous value for our shareholders."

Updated its fiscal 2016 GAAP EPS guidance to $2.09 to $2.14, and non-GAAP EPS  guidance to $1.90 to $1.95.

Here’s a graph that looks at Hewlett Packard Enterprise’s price, consensus, and EPS surprise:

HEWLETT PKD ENT Price, Consensus and EPS Surprise

HEWLETT PKD ENT Price, Consensus and EPS Surprise | HEWLETT PKD ENT Quote

Hewlett Packard Enterprise Co. was spun-off from the Hewlett-Packard Company in November 2015. The company operates in four segments: Enterprise Services, Enterprise Group, Software, and Financial Services. The company is headquartered in Palo Alto, California.

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