Interpreting the Old HP versus the New HP and Hewlett Packard Enterprise

The old Hewlett-Packard is no more, but investors still got one last unified earnings report that they get to peruse for the state of the PC business for HP Inc. (NYSE: HPQ) and for Hewlett-Packard Enterprise Company (NYSE: HPE).

It turns out that the combined HP report and guidance were short of estimates and the guidance was not that robust either. Still, valuations remain very low here and some newer operations continue to be interesting to some investors. There is just one problem — investors, analysts, and outsiders all have a hard time truly understanding what expectations to really go with when companies break themselves up.

Fourth quarter non-GAAP diluted net earnings per share of $0.93, which was within the previously provided outlook of $0.92 to $0.98 per share; and fourth quarter cash flow from operations of $2.6 billion was down 3% from the same time a year ago.

For the year, revenues were down 7% to $103.4 billion and earnings per share were down 4% to $3.59 EPS. HP noted that revenue would have been down only 2% on a constant currency basis.

HP Inc. (NYSE: HPQ) saw its shares rise 2.9% to $14.64 in regular trading, but the after-hours reaction was down 5.5%. Guidance was given as follows for HP Inc.:

• First Quarter non-GAAP diluted earnings to be in the range of $0.33 to $0.38 EPS.
• Fiscal Year 2016 non-GAAP diluted earnings to be in the range of $1.59 to $1.69 EPS, excluding after-tax costs estimated to be approximately $0.09 per share.

Hewlett-Packard Enterprise Company (NYSE: HPE) was up marginally after signaling its servers, storage and networking sales. The newer company has seen two quarters of revenue growth on a constant currency basis. HPE closed down 1.1% at $13.69, and shares were up 2.8% at $14.07 shortly after report. Guidance was given as follows for Hewlett Packard Enterprise:

• First quarter non-GAAP diluted earnings to be in the range of  $0.37 to $0.41 EPS.
• Reaffirmed 2016 Full Year Outlook of $1.85 to $1.95 in non-GAAP EPS.

One last reminder — investors analysts and market observers of all sorts often have a very hard time understanding the metrics of split ups when there are this many moving parts. They have to figure out the cross order flows that were not made and many other moving parts have to be considered.