Shares of Hewlett Packard Enterprise (HPE - Get Report) were 5% higher in after-hours trading on Tuesday following stronger-than-expected third-quarter financial results from the technology solutions firm.
For the quarter, the Palo Alto, Calif.-based company posted adjusted earnings of 30 cents per share on revenue of $8.21 billion. Wall Street was expecting adjusted earnings of 26 cents per share on revenue of $7.5 billion.
"HPE had a good third quarter, right when they needed it," Patrick Moorhead of Moor Insights & Strategy said in a note, citing double digit growth in networking and storage, among other strong points during the quarter.
Sales of HPE's enterprise group, which contains servers and storage and accounts for the bulk of revenues, grew 3% to $6.8 billion. Server revenues dropped 1%, but storage gained 11%. Revenues from HPE's networking products gained 16% and the technology services business rose 1%.
"Of concern could be the 1% decline in server revenue, traditionally a strong point for HPE, but not in the last few quarters," Moorhead said.
The company said it expects fourth-quarter non-Gaap earnings of 26 cents to 30 cents per share. Analysts surveyed by FactSet called for 40 cents in earnings per share for the period.
HPE closed the $8.8 billion merger of its software business with Micro Focus International plc on Friday, closing the latest chapter in CEO Meg Whitman's restructuring of the company. In April, HPE split off its enterprise services business and merged it with Computer Sciences Corp. to create DXC Technology Co. DXC in an $8.5 billion deal. Whitman previously had split off HPE from consumer-oriented HP Inc (HPQ - Get Report) in late 2015.
As Whitman has broken up HPE, the company has attracted activist shareholders. Billionaire David Einhorn's Greenlight Capital took a 0.3% position in the stock during the second quarter. Jeff Smith's Starboard Value and Barry Rosenstein's Jana Partners boosted their positions to 0.6% each, while Dan Loeb's Third Point maintained its 0.4% stake in the stock.
Despite the strong results, shares of Hewlett Packard had been lower almost 40% year-to-date. Attention on the conference call will be squarely on the company's CEO Meg Whitman who is expected to field questions regarding the company's pricing and how its coping with increased competition in storage.
Updated from 4:08 p.m. with additional information
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