Hewlett Packard Enterprise Co. stock is surging after the company posted a strong earnings report.
HPE reported its first quarterly earnings Thursday since splitting from tech giant Hewlett-Packard last year — and beat expectations on Wall Street. Shares climbed nearly 15 percent to around $15.50 Friday morning.
In an interview with CNBC Friday, HPE President and CEO Meg Whitman lauded the decision to split Hewlett-Packard into two separate companies.
“I think the strength of the quarter … does really lie on the premise of the split, which is two different businesses with more focus from senior leaders, more focus on our customers. I think it’s at least the first proof point that this was the right thing to do,” she said.
Hewlett Packard Enterprise sells commercial computer systems, software, storage and tech services. HP Inc. sells printers and personal computers. From its inception, the former was widely expected to be more profitable than the latter.
HPE reported a 52 percent decline in net income for the first quarter of 2016. Revenue fell 2.5 percent during that period. But when excluding the effects of a strong dollar, the company said that revenue increased 4 percent to $12.72 billion.
The Silicon Valley company also announced it returned more than $1 billion to shareholders in the form of dividends and stock buybacks in the first quarter of 2016. It said it planned to return 100 percent of its free cash flow this year to shareholders using such tools.
During an earnings call Thursday, HPE CEO Whitman said the company was nearing the closing of a deal to sell a majority stake in China-based server assets to Tsinghua University. The $2.3 billion deal was originally supposed to be complete by February.
“We are confident that the deal’s going to close by the end of May,” she said. “We’re working through some Chinese regulatory approval.”