HP Inc. ( HPQ ) posted mixed fiscal second-quarter results late Wednesday, beating views on earnings per share, but missing Wall Street’s target for sales. HP earned 41 cents a share excluding items on sales of $11.59 billion for the quarter ended April 30. Analysts polled by Thomson Reuters expected HP to earn 38 cents a share on sales of $11.72 billion. On a year-over-year basis, adjusted EPS rose 5% while sales fell 11%. Excluding foreign currency effects, revenue was down 5%. The Palo Alto, Calf.-based company continues to suffer from a weak market for personal computers and printers. “This quarter we delivered strong results and solid progress towards our long-term strategy,” HP CEO Dion Weisler said in a statement . “We achieved our operational objectives, unleashed truly amazing innovations, and grew in strategic areas of our business, despite tough market conditions.” Revenue in HP’s personal computer business fell 10% in Q2, while printing business revenue declined 16%. For the current quarter, HP is forecasting adjusted profit of 37 to 40 cents a share. Wall Street had been modeling for 40 cents. For the full fiscal year, HP is targeting adjusted EPS of $1.59 to $1.65. Analysts were looking for $1.59. HP stock was flat in after-hours trading following the earnings news release. During the regular session Wednesday, HP rose 2.4% to 12.20.
Western Digital ( WDC ) on Tuesday received a price-target hike to 50 from 45 and an upgrade to outperform from market perform by Cowen analyst Karl Ackerman. The moves comes two days before Western Digital is slated to give new guidance that will include its $16 billion acquisition of SanDisk. Western Digital announced the completion of its SanDisk acquisition last week, creating a big competitor in both disk drives and flash-chip storage. The company has said it would update its guidance after the market close Thursday for its fiscal fourth quarter ending July 1. Ackerman says while he expects the SanDisk acquisition to dilute earnings through 2017, “We think the stock should start to work higher from here, as Western Digital’s updated guidance should act as a positive catalyst and help eliminate uncertainty.” Western Digital stock was above 42, up more than 4%, in afternoon trading in the stock market today . However, the stock is down 47% since the acquisition was announced in October. Shares hit a four-year low of 34.99 on May 16 but are up 20% since then. Western Digital and SanDisk had combined revenue of about $20 billion in 2015, with $14.5 billion from Western Digital. It’s the largest provider of disk drives, ahead of Seagate Technology ( STX ). SanDisk is a leading provider of chips used for data storage in a wide variety of devices, including smartphones, tablets and PCs. The deal will help SanDisk, which has a strong retail business, move up the ladder to make bigger sales to businesses and other enterprise customers — the market where Western Digital is strongest. Western Digital gets the ability to offer chip-based storage in areas where its disk drive technology is losing ground. Western Digital’s year-over-year revenue has fallen for six straight quarters. That’s largely due to lower disk drive sales in the slumping PC market and the migration of disk storage to chip-based storage in many products. Seagate’s revenue has fallen for five straight quarters. “Now that SanDisk is subsumed into Western Digital’s operations, Western Digital now morphs from an enterprise highly exposed to the cannibalization of next-generation storage into a media agnostic, vertically integrated data storage provider capable of generating mid-single-digit revenue growth and low-double-digit EPS growth,” Ackerman wrote. He said the top 10 customers shared between Western Digital and SanDisk include Best Buy ( BBY ), Apple ( AAPL ), Hewlett Packard Enterprise ( HPE ) and HP Inc. ( HPQ ) “With SandDisk, Western Digital can now more effectively service both enterprise and hyper-scale customers and capitalize on the explosion of data creation that should double every two to three years by 2020,” Ackerman wrote.
Splunk ( SPLK ) and Pure Storage ( PSTG ) are positioned to deliver solid earnings this week, despite a challenging environment for spending on information technology, analysts say. Pacific Crest Securities analyst Brent Bracelin said in a research note Monday that Splunk remains the firm’s “highest-conviction growth idea that continues to deliver solid results.” And he said Pure Storage has emerged as the largest and fastest-growing provider of flash-based storage technology “that we believe remains well positioned to grow 60%-plus this year, driven by share gains in a shrinking storage market.” IBD Take: Splunk ranks No. 4 in its group. Learn why at IBD Stock Checkup . Splunk provides software for machine-to-machine data analytics that companies use to attain real-time intelligence. The consensus on Splunk is for revenue of $174.1 million for its fiscal Q1 ended on or near April 30, according to a poll by Thomson Reuters. That would be an increase of 38.5% year over year, maintaining its double-digit growth rate going back more than four years. Analysts expect a 2-cent loss per share minus items, vs. a 1-cent loss in the year-earlier quarter and an 11-cent profit in the previous quarter. Splunk is set to report after the market close Thursday. “We remain bullish on the prospects for Splunk to grow into a $1 billion-plus revenue franchise based on a differentiated software,” Bracelin wrote of the company that posted revenue of $668 million for fiscal 2016 ended Jan. 31. RBC Capital Markets analyst Matthew Hedberg has an outperform rating on Splunk stock and a price target of 60. Splunk shares were near 54, up 2%, in afternoon trading in the stock market today . The stock is 81% higher since hitting a low of 29.85 on Feb. 12. Pure Storage, meanwhile, is set to report earnings after the market close Wednesday for its fiscal Q1 ended April 30. The Wall Street consensus estimate on revenue is $138 million, up 86% year over year, following 12 quarters in a row of triple-digit gains. The bottom-line consensus is for a per-share loss minus items of 23 cents, vs. a 26-cent loss in the year-earlier quarter. Pure Storage received an upbeat review ahead of its Q1 report, with an analyst saying the flash storage market appears to be growing faster than expected. Pure Storage stock was trading near 14.75, up 1.5%, Monday afternoon. It came public in October 2015 with shares priced at 17. Other tech companies reporting this week include Hewlett Packard Enterprise ( HPE ) and HP Inc. ( HPQ ) Hewlett Packard Enterprise, which provides business enterprise services and cloud-enabled technologies, is projected to report revenue of $12.3 billion and EPS minus items of 42 cents. It reports after the close Tuesday. Hewlett-Packard Enterprise was trading near 16, up 1.5%. HP, which sells personal computers and printers, reports its fiscal second quarter after the close Wednesday. The consensus on revenue is $11.7 billion, with views for EPS minus items of 38 cents. HP stock was near 11.70, up a fraction.