Hewlett Packard Enterprise Tumbles After Mixed Results, Spinoff Announcement

Shares of Hewlett Packard Enterprise Co HPE traded down about 3.5 percent in Wednesday’s after-hours session, following the announcement of the company’s Q3 results.

While EPS of $0.49 beat the Street’s consensus by $0.04, revenue of $12.2 billion missed estimates by $440 million.

For the fourth quarter, management expects non GAAP EPS of $0.58 to $0.63, above the $0.60 consensus at the midpoint. For the full year, non GAAP EPS are envisioned in the $1.90 to $1.95 range, mostly ahead of the $1.87 consensus estimate.

Hewlett Packard Enterprise also announced it was spinning off and merging its software division with Britain’s Micro Focus International PLC, in a deal valued at roughly $8.8 billion. The deal stipulates that HPE shareholders will retain 50.1 percent ownership of the new company, while the British firm will pay an extra $2.5 billion in cash to its American counterpart.

“We believe that the software assets that will be a part of this combination will bring better value to both our customers and shareholders as part of a more focused software company committed to growing these businesses on a stand-alone basis," CEO Meg Whitman explicated.

Shares of Hewlett Packard Enterprise closed up $0.23 or 1.05 percent on Wednesday, at $22.09.