HP Enterprise announced better-than-expected results for its fiscal first quarter. The company also announced it will use the benefits from the US corporate tax reform to increase returns to shareholders and employee pensions.
In the three months to January, revenues rose 11 percent year-on-year to USD 7.7 billion, while the adjusted operating margin fell to 7.7 percent from 9.5 percent a year ago. Net earnings from continuing operations jumped to USD 0.92 per share from USD 0.15, and adjusted EPS, excluding one-time items like gains from the tax reform, increased to USD 0.34 from USD 0.28.
Data centre networking saw the strongest sales growth in the quarter, up 27 percent, followed by 24 percent growth in storage revenue. Overall, the Hybrid IT segment generated sales of USD 6.3 billion, up 10 percent year over year, with a 9.6 percent operating margin. The Intelligent Edge segment, which includes Aruba, saw sales increase 9 percent to USD 620 million, with a 2.9 percent operating margin.
HPE said the US tax reform will make it possible to use some of its offshore cash to increase shareholder returns to USD 7 billion in the form of share repurchases and dividends by the end of fiscal 2019, including a 50 percent increase in its dividend. In addition, it will significantly increase matching contributions to employee pension plans and create new degree assistance programs to encourage development and learning for employees.
HPE also increased its full-year outlook to take account of the tax reform and now forecasts EPS and adjusted EPS at USD 1.35-1.45. The tax benefits are largely offset by restructuring costs in the adjusted figure. For fiscal Q2, HPE forecast EPS of USD 0.10-0.14 and adjusted EPS of USD 0.29-0.33.
