Hewlett Packard Enterprise (NYSE:HPE) delivered its fiscal second-quarter results on Wednesday. Analysts overall expected a decline in their revenue as the company continuously failed to address corporate demands.
Analysts Expectations
For their earnings, analysts expected an adjusted earnings of 35 cents per share which is 16% lower than their earnings of 42 cents per share during the same period last year.
Wall Street analysts also expected their revenue to decline at around 24.2% to $9.64 billion compared to the $12.71 billion a year ago. This was expected due to the company’s 100,000 employee sale of its computing services business to Computer Sciences Corp (NYSE:DXC) back in April.
The company’s revenue in their software and service subscription sales are also expected to go down despite HP’s efforts in investing in the following businesses. HP currently has plans to sell its software business this September and is expected to shift their recurring revenue percentage from 45% to 30%. Around 46% of HP’s revenue is also divested from its servers followed by 24% coming from the rest of its technology services business.
Disappointing Q2 Earnings
The Palo Alto-based company delivered an even weaker earnings report on Wednesday that missed analysts estimates.
For the fiscal second-quarter, the company reported a loss of $612 million or around 37 cents per share down by more than 200% from last year. The company’s adjusted earnings for the quarter came at around 25 cents per share after non-recurring costs and pre tax expenses. The results mostly reflected the company’s recent merger with Computer Sciences Corp.
The company’s adjusted income rose by 29% to $400 million but still largely missed analysts estimates for $615.3 million in profit.
According to HP chief executive officer Meg Whitman, the company still has a lot of work to do but remains confident about the results of their efforts in delivering to their customers and partners.
Meanwhile, HPE chief financial officer Tim Stonesifer stated that the enterprise services division merger allowed and gave the company another opportunity to optimize the cost structure of the company’s future.
HPE’s enterprise group revenue has also lost around 13% year-over-year to $6.2 billion while its revenue from its software division fell by 11% compared to the same quarter last year to $685 million. Meanwhile, HP’s financial services revenue inched 11% higher to $872 million.
Despite this, the company was able to slightly beat analysts revenue estimates delivering a revenue of $9.9 billion for the quarter compared to consensus analysts estimates of $9.87 billion.
HPE Shares
HPE Shares have declined by around 19% since the start of the year. Following the release of the earnings report, the shares of the company sinked by 2.3% during the after-hours trading to $18.36 down by 45 cents from the previous trading session.