HPE splits again, posts good results

Hewlett Packard Enterprise (HPE) is not yet done splitting, the media have reported recently. According to multiple media reports, HPE is spinning off its IT Services business, and merging it with Computer Sciences Corp (CSC).

Hewlett Packard Enterprise is itself a spinoff, after HP got split late last year.

The new company is rumoured to be named SpinCo, and will be partially owned by HPE. Computer Sciences CEO Mike Lawrie will become chairman and CEO, while HPE CEO Meg Whitman will be on the company's board. Both HPE and CSC will be nominating half of the board.

CNBC said the news of the merger saw Computer Sciences' stock soaring as much as 25 per cent on Tuesday. The merger is expected to be completed by March 2017, the same source said.

"This brings scale to both companies. HPE services has reduced costs and focused on more profitable deals. In the long term they need scale. CSC will give them greater scale across a greater variety of customers," said Crawford Del Prete, chief research officer at IDC.

According to Ars Technica, the deal will save HPE around a billion in operating costs.

HPE also reported its earnings, which reportedly met expectations on Wall Street. Adjusted earnings posted were at 42 cents per share, amounting to $12.71 billion in sales for the fiscal second quarter.

Even though profit fell two per cent, revenue was up one per cent.

Image source: Shutterstock/Ken Wolter