The most recent profit report from Hewlett-Packard enterprise Co. (Ticker NYSE:UPR) is encouraging. Again, the expectations of wall Street was quite pessimistic, if not depressing. Yet stock VPO was able to show that he can grow the TOP-line, revenue increased by 11% to $ 7.7 billion.
Keep in mind the consensus was only 7.07 billion. So Yes, it was a big step.
The growth of professional education in the areas of storage, which increased by 24% and DC networks 27%. Note that analysts predicted there would be decline!
The figures in the bottom row was also solid. Profit to 1.44 billion, or 89 cents a share, compared with $267 million, or 16 cents per share in the same period a year ago.
A closer look at the stock VPO
Based on these numbers, the stock VPO jumped by 10%. However, since then, the enthusiasm diminished. It is true that part of this was due to the General instability in the stock of technology companies. Even growth companies as salesforce.com ink. (Ticker NYSE:CRM), felt the pressure.
But when it comes to the stock VPO, I still think there are some deeper issues. One is that the company had to face considerable damage due to the spin-off of HP ink (USA:Cheka) and ongoing restructuring. Such steps may affect the performance and responsiveness of technical trends.
Yet the last quarter show that the company can grow? This is true. But the results should be taken with a grain of salt. When it comes to enterprise technology, few transactions can have a significant impact on the company’s income.
In addition, as for the 1 quarter, year on year comparisons were quite favorable, and there was a one-time impact from some of the biggest acquisitions, for example, for nimble and SimpliVity.
But perhaps the biggest problem for HP is the potential disruption from the secular trends in the cloud. Simply put, this means less demand on their servers, which account for 40%+ of income.
Mega machinery operators Amazon.com ink. (Nasdaq:weekly news), Microsoft (Nasdaq:Russian market) and alphabet Inc (USA:stock markets) continue to grow rapidly, as customers continue to outsource their it infrastructure to the cloud.
The benefits are definitely compelling, from the point of view of reducing costs, simplifying control and richer Analytics.
There are also companies on the development of software, such as VMware, developer. (NYSE:VMW) and from nutanix Inc (Nasdaq:NTNX), which allow much more affordable private cloud solutions. They are generally easier to install and rely on standard hardware.
In light of this, it is not surprising that HPE was struggling with finding new business. Last year revenue fell by nearly 5%, and they were in the previous year of about 4%.
The bottom line for Hewlett Packard stock
Outdated technology, operators can certainly find ways to turn things around. Just look at the success of msft and Adobe (Nasdaq:easy to create, adjust).
But it’s not easy. This is especially the case when there are drastic changes. And I think that this is a problem for the stock VPO. For the most part, the company has not shown a convincing strategy of search of new ways of economic growth.
Now this does not mean that the shares VPO will explode. In the end, the company plans to increase dividends by 50% and increase his ransom.
However, such actions can be seen from the company, which is focused mainly on short – term- not to make big bets on new technologies.
Tom Taulli is the author of high-profit IPO strategies, All about commodities and all about short sales. Follow him on Twitter at @ttaulli. At the time of this writing, he has not held positions in any of the above securities.