HP Says Split is On Track, Completes Acquisition of Aruba

HP reported net revenue of $25.5 billion for its second fiscal quarter, down 7% from the prior-year period and down 2% on a constant currency basis.  Second quarter GAAP diluted net earnings per share (EPS) was $0.55, down from $0.66 in the prior-year period and below its previously provided outlook of $0.57 to $0.61. Second quarter non-GAAP diluted net EPS was $0.87, down from $0.88 in the prior-year period and within its previously provided outlook of $0.84 to $0.88.

HP announced that its planned separation into two independent, Fortune 50 companies remains on track.  The company expects associated dis-synergies of approximately $400 to $450 million.

In addition, HP completed its acquisition of Aruba Network earlier this month.

Some highlights for the quarter.

• Personal Systems revenue was down 5% year over year with a 3.0% operating margin. 
• Commercial revenue decreased 7% and Consumer revenue decreased 2%. Total units were up 2% with Notebooks units up 19% and Desktops units down 14%.
• Printing revenue was down 7% year over year with an 18.3% operating margin. Total hardware units were down 4% with Commercial hardware units up 1% and Consumer hardware units down 6%. Supplies revenue was down 5%.
• Enterprise Group revenue was down 1% year over year with a 14.5% operating margin. Industry Standard Servers revenue was up 11%, Storage revenue was down 8%, Business Critical Systems revenue was down 15%, Networking revenue was down 16% and Technology Services revenue was down 8%.  Additionally, HP closed its acquisition of Aruba in May.
• Enterprise Services revenue was down 16% year over year with a 4.0% operating margin.  Infrastructure Technology Outsourcing revenue was down 20%, and Application and Business Services revenue declined 8%.
• Software revenue was down 8% year over year with a 17.9% operating margin. License revenue was down 17%, support revenue was down 2%, professional services revenue was down 15% and software-as-a-service (SaaS) revenue was down 5%.
• HP Financial Services revenue was down 7% year over year with a 2% decrease in net portfolio assets and a 1% decrease in financing volume. The business delivered an operating margin of 10.6%.

http://www8.hp.com/us/en/hp-news/press-release.html?wireId=1951111&pageTitle=HP+Reports+Fiscal+2015+Second+Quarter+Results+#.VV63Pvn49_B

In March 2015, HP agreed to acquire Aruba Networks for $24.67 per share in cash, reflecting an equity value of approximately $2.7 billion net of cash and debt.

Aruba, which is based in Sunnyvale, California, is a leading supplier of WLAN solutions for enterprises.  The company had revenues of $729 million in fiscal 2014, and has reported compound annual revenue growth of 30 percent over the last five years. It has approximately 1,800 employees.  Aruba has made rapid progress in 802.11ac Wi-Fi upgrades.  It offers integrated solutions for many vertical market segments, such as retail or healthcare.

HP said Aruba’s marketing and channel model will complement its own networking business and go-to-market breadth.  Together, the companies will focus on next-generation converged campus solutions, leveraging the strong Aruba brand.  This new combined organization will be led by Aruba’s Chief Executive Officer Dominic Orr, and Chief Strategy and Technology Officer, Keerti Melkote, reporting to Antonio Neri, leader of HP Enterprise Group.  With this move, HP will be uniquely positioned to deliver both the innovation and global delivery and services offerings to meet customer needs worldwide.