Cloud competition weighs on HPE

Article Excerpt

HEWLETT-PACKARD ENTERPRISE CO. $15 (New York symbol HPE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares o/s: 1.4 billion; Market cap: $21.0 billion; Price-to-sales ratio: 0.7; Dividend yield: 3.0%; TSINetwork Rating: Average; www.hpe.com) sells computing services and products, such as servers and analytics software, to businesses and governments. The company’s earnings in its fiscal 2019 first quarter, ended January 31, 2019, rose 13.5%, to $590 million from $520 million a year earlier. HP Enterprise spent $814 million on share buybacks in the quarter. As a result, per-share earnings jumped 31.3%, to $0.42 from $0.32. The improved earnings are mainly due to cost cuts and lower prices for memory chips and other component parts. Revenue in the quarter, however, fell 1.6%, to $7.55 billion from $7.67 billion. That’s because businesses continue to shift more of their computing to cloud-based systems, which has hurt demand for HP Enterprise’s hardware products (servers and data storage devices). HP Enterprise is still a hold. hold. …