HPE: News from the very top …

The final quarter of HPE’s financial year 2018 has just come to a close and the press announcements and analyst reports are beginning to appear. It might be of interest to the NonStop community if it looks at just two published updates the first being the actual announcement by HPE the other, an update by an analyst tracking hedge fund performances produced just a few hours before the HPE press release. Bottom line? It’s encouraging news for all parties with a vested interest in the ongoing success of HPE.

Starting with the press coverage that followed the HPE press release, the first headline you may come across simply stated, HP Enterprise +2% as Q4 EPS tops high end of guidance. Hewlett Packard Enterprise today announced financial results for its fiscal 2018 and the fourth quarter, ended October 31, 2018. Fourth quarter net revenue of $7.9 billion was up 4% from the prior-year period and up 3% when adjusted for currency. According to statements made by HPE CEO Antonio Neri –

“Hewlett Packard Enterprise delivered another impressive quarter in Q4, concluding a very successful fiscal year 2018 marked by significant transformation and achievement.

“We excelled in delivering differentiated new capabilities for our customers that drove meaningful top line growth while expanding margins that fueled strong cash flow and shareholder returns.

“As we close my first fiscal year as CEO, I am incredibly proud of where we stand in the marketplace and of our innovative culture. In 2019, I have great confidence that our experienced global team and proven strategy will accelerate what comes next for our customers from edge to cloud.”

Should you be interested in the individual performance of the different business units – and yes, NonStop resides within the Hybrid IT business unit and is reflected in the numbers for Compute – then here’s a quick overview –

Fourth Quarter Fiscal Year 2018 Segment Results

Intelligent Edge revenue was $814 million, up 17% year over year and up 15% when adjusted for currency, with 10.1% operating margin. HPE Aruba Product revenue was up 17%, up 15% when adjusted for currency, and HPE Aruba Services revenue was up 16%, up 16% when adjusted for currency. 

Hybrid IT revenue was $6.4 billion, up 5% year over year and up 4% when adjusted for currency, with 11.9% operating margin. Compute revenue was up 9%, up 7% when adjusted for currency, Storage revenue was up 6%, up 4% when adjusted for currency, DC Networking revenue was up 2%, down 1% when adjusted for currency, and HPE Pointnext revenue was down 3%, down 3% when adjusted for currency.  

Financial Services revenue was $939 million, down 7% year over year and down 5% when adjusted for currency, net portfolio assets were flat year over year, and financing volume was up 8% year over year. The business delivered an operating margin of 7.8%.

What does this tell us? Coming as it does so soon after HPE Discover, 2018, Madrid it confirms for many followers of HPE that the real focus is on execution and by this I mean, on executing to the plan of transforming enterprise IT to the kind of Hybrid IT HPE envisions as being the best option for enterprises. The catering to a number of transitionary deployments as can be expected to be pursued by risk-averse enterprises makes sense and to see how HPE’s investment in NonStop has allowed it to become a contributor to this HPE plan is even more encouraging than all other news being shared.

To read the complete HPE Press Release of December 4, 2018, now published, just follow this link –
https://news.hpe.com/hpe-reports-fiscal-2018-full-year-and-fourth-quarter-results/

As for the update from Insider Monkey following hedge funds, it’s interesting to see an upbeat report about investment opportunities focused on HPE. In the report, Here is What Hedge Funds Think About Hewlett Packard Enterprise Company, analyst Reymerlyn Martin notes how –

“The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.

“Hewlett Packard Enterprise Company investors should be aware of an increase in support from the world’s most elite money managers in recent months. HPE was in 30 hedge funds’ portfolios at the end of September.

“At Q3’s end, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from the previous quarter. By comparison, 29 hedge funds held shares or bullish call options in HPE heading into this year. With hedgies’ sentiment swirling, there exists an ‘upper tier’ of notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

“The largest stake in Hewlett Packard Enterprise Company (NYSE:HPE) was held by Pzena Investment Management, which reported holding $561 million worth of stock at the end of September. It was followed by AQR Capital Management with a $123.5 million position.”

To read this report of December 4, 2018, from Insider Monkey, just follow this link –
https://finance.yahoo.com/news/hedge-funds-think-hewlett-packard-154118689.html

It may come as a surprise for some members of the NonStop community to read about HPE as being a small-cap company, but since the split of HP in two and subsequent spin-mergers, that is exactly how HPE is viewed today. On the other hand, whether small or large, or whether it becomes the target of your own investment strategy, what remains most important of all is seeing a business improving its performance quarter after quarter, year after year. After extended periods of uncertainty over its future and by association the future of NonStop, HPE is now delivering the type of results investors like and for those members of the NonStop community contemplating further investment in NonStop systems, this is good news indeed!