HP Enterprise’s Quarterly Earnings Surprise

When a major corporation like Hewlett-Packard decides to split in two, investors perk up. The strategy could lead to more streamlined, efficient operations, or it could signal trouble brewing for a business with cracks in its foundations.

Last summer, Hewlett-Packard announced its split, which resulted in two corporations. One of those was HP Enterprise, a B2B unit now focused on IT services for businesses.

While analysis had pointed to HP’s enterprise clients as its most successful segment, just months after the announcement experts began to question whether HP Enterprise would actually survive. Reports uncovered plans to reduce its staff soon after news surfaced that the head of its Enterprise Group, Bill Veghte, would leave the post, allowing for a different leader to head the new company.

So, it is perhaps even more surprising that, on Friday (March 4), HP Enterprise reported better-than-expected earnings.

Its first quarterly report as a sovereign company saw revenue from hardware services, like computer servers, data storage and networking tools, all rise, despite a 3 percent decline in total year-over-year sales.

According to reports, computer hardware made up the majority of HP Enterprise’s revenue, which hit $12.7 billion for the quarter.

Further, analysts were optimistic about HP Enterprise’s ability to eventually pull up revenue from its technology services.

Following the earnings report, HP Enterprise stock surged 14 percent, reports said.

The results were far better than HP Enterprise’s other half, HP, the consumer-facing unit of the once-unified Hewlett-Packard. HP reported a 12 percent decline in revenue, signaling weakening PC and printer sales. The trend had also led to struggles for Hewlett-Packard as investors began to worry whether the company could survive a shift in technology consumption habits, largely leading to the split in the first place.

Still, it’s no easy road ahead for the firm. CEO Meg Whitman will continue to move forward with staff cuts, and the company also plans to shift some operations overseas, according to reports.