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$HPQ reported a 29% growth in profit for 4Q17 as the PC and printer company continues to see growth from both of its businesses. HPQ posted a double-digit top line growth, while its sister company $HPE managed a single-digit growth. To note, HPQ posted strong results for the last few quarters after it spun-off from HPE.
$HPE said it is currently targeting overall operating margins in the range of 11-12% for fiscal 2018. While the margins will be low in the first quarter due to seasonal factors, they will improve significantly in the second half of the year supported by estimated cost savings of about $250MM.
$HPE said in the coming quarters, headwinds from competitive pricing and commodities will partially offset the benefits of the improving IT spend environment. The company expects free cash flow of $1Bil for fiscal 2018, when a total of $2.5Bil will be returned to shareholders - in the form of $2Bil of share buybacks and $500MM of dividends.
$HPE CEO Meg Whitman said she will step down by the end of first quarter. She will be succeeded by President Antonio Neri, who will assume the additional charge of CEO. Meg will continue as a Director on the company’s BoD. She said all the recent acquisitions have been highly complementary to the core business of Hewlett Packard Enterprise.
$HPE said it expects to report GAAP earnings in the range of $0.01 per share to $0.05 per share for the first quarter of fiscal 2018. Non-GAAP earnings, excluding special items, are estimated to be between $0.20 per share and $0.24 per share.
$HPE, the market leader in computing servers, reported a 5% growth in 4Q17 revenues to $7.7Bil, on the back of impressive performance by the Financial Services segment. The strong top line growth resulted in a 74% annual increase in earnings to $524MM or $0.32 per share. Non-GAAP earnings were $0.31 per share, down 49% compared to last year.
$DXC posted adjusted earnings of $1.93 per share on revenue of $6.16Bil for 2Q18. This compares to earnings of $0.76 per share on revenue of $6.35Bil on a pro forma basis a year earlier. To note, $HPE spun off its enterprise services business in April, which then merged with Computer Sciences to create DXC Technology.
$IT said in 2Q17, worldwide server revenue increased 2.8% YoY, while shipments grew 2.4% from 2Q16. $HPE continued to lead in the worldwide server market based on revenue. Despite a decline of 9.4%, the company posted $3.2Bil in revenue for a total share of 23% for 2Q17. Dell EMC saw 7% growth and 19.9% market share.
$HPE announced the offering of senior notes and it intends to use the net proceeds to fund the repayment of the $750MM outstanding principal amount of its 2.450% notes due 2017. The proceeds would also be used for the repayment of the $350MM outstanding principal amount of its floating rate notes due 2017, and for general corporate purposes.
In 3Q17, $HPE’s Enterprise Group operating margins were up 50BP sequentially. This was mainly driven by cost savings offsetting the pressure seen from a full quarter of stranded cost along with short-term dilution. $HPE expects margins at 4Q17-end to be closer to 11% primarily due to commodity cost pressure.
In 3Q17, $HPE’s Server revenue was flat and grew 12% excluding tier-1, compared to 3Q16. Storage revenue was up 11% driven by the Nimble acquisition, offset by continued challenging markets. Networking revenue grew 16% driven by Aruba Wireless Solutions which grew over 30%. Technology services grew revenue 2% YoY.
$HPE announced its intent to acquire Cloud Technology Partners, a cloud consulting company that helps customers move to a cloud, build new cloud-based solutions and manage their cloud environment. CTP’s consulting, design and operational advisory services for cloud environments will strengthen $HPE’s hybrid IT consulting expertise.
In 3Q17, $HPE’s Enterprise Group revenue was $6.8Bil, up 3% YoY and up 3% when adjusted for currency. Software revenue was $718MM, down 3% YoY and down 2% when adjusted for divestitures and currency. Financial Services revenue was $897MM, up 10% YoY.