HPE quarterly results top estimates on higher server demand

FILE PHOTO - Signs for Hewlett Packard Enterprise Co., cover the facade of the New York Stock Exchange November 2, 2015. REUTERS/Brendan McDermid

(Reuters) - Hewlett Packard Enterprise Co beat analysts’ estimates for quarterly profit and revenue on Tuesday, driven by higher demand for its storage and data center networking products.

HPE’s annual sales have slid since it split from Hewlett-Packard Co in 2015 as its mainstay server business has struggled with corporate customers increasingly buying non-branded servers that are much cheaper.

In response, HPE is cutting costs as part of its HPE Next initiative announced last year, aiming to drive gross cost savings of $1.5 billion in the next three years.

The company, which competes with rivals such as Inc and Microsoft Corp, forecast current-quarter adjusted earnings between 33 cents and 37 cents per share, the mid-point of which came in line with Wall Street estimates.

Revenue from Hybrid IT division, which houses servers, storage and data center networking products, rose 4.6 percent to $6.44 billion, above analysts’ estimates of $6.30 billion, according to IBES data from Refinitiv.

The company’s net loss was $757 million, or 52 cents per share, in the fourth quarter ended Oct. 31 from a profit of $524 million, or 32 cents per share, a year earlier.

HPE’s revenue rose 3.7 percent to $7.95 billion, above analysts’ average estimate of $7.84 billion.

Excluding items, the company earned 45 cents per share, beating the average analyst estimate of 43 cents.

Reporting by Sayanti Chakraborty in Bengaluru; Editing by Shailesh Kuber