Hewlett Packard Enterprise (HPE) has provided a strategic update looking forward and given its outlook for fiscal year 2017. CEO Meg Whitman reiterated HPE's vision of being the industry's leading provider of hybrid IT, built on a secure, next-generation, software-defined infrastructure that will "run customers' data centres today, bridge them to multi-cloud environments tomorrow, and power the emerging Intelligent Edge that will run campus, branch and Industrial IoT applications for decades to come." Following a number of strategic portfolio moves, including the spin-offs and mergers of the Enterprise Services and Software businesses, Whitman is confident the future HPE will have the right assets to achieve this vision, including core software and services capabilities.
The company reiterated its 2016 adjusted earnings per share guidance at USD 1.90-1.95 and said it expects the figure to rise to USD 2.0-2.10 for 2017 (combined company). Revenue is expected to grow 1-2 percent year-on-year, adjusted for divestments and forex effects. The company said it is committed to returning USD 3 billion to shareholders in the coming fiscal year, in the form of share buy-backs and dividends.
For fiscal 2017, HPE is expecting an operating net cash balance of USD 8 billion and sees normalized free cash flow for the future HPE at USD 2.1-2.4 billion. When adjusted for the lower EPS contribution and expenses associated with the ES and Software transactions, the reported adjusted EPS is seen at USD 1.45-1.55 and EPS at USD 0.29-0.39. Free cash flow will then be expected at a negative USD 1.8 billion.
Following completion of the ES and Software transactions, the future HPE should see modest revenue growth in fiscal 2017, with adjusted EPS at 1.25-1.35 and EPS at USD 0.29-0.39. HPE said it will be a faster growing, higher margin company, with strong cash flow in full year 2018 and beyond.
The spin-merge of HPE’s Software business with Micro Focus is still forecast for the second half of fiscal year 2017. The company said the combined entity will be one of the world's largest pure-play software companies with a broad portfolio of products and services to address the challenges IT and business leaders are facing.
