Call it Meg Whitman’s parting gift.

Hewlett Packard Enterprise Co. today reported stronger-than-expected revenue and profit per share in its fiscal first quarter, fueled in roughly equal parts by improved business execution, a strong sales backlog and acquisitions.

Revenue rose 11.6 percent year-over-year, to $7.7 billion, beating consensus estimates of $7.07 billion by 9 percent for the largest quarterly increase in more than two years. Profit per share of 34 cents before certain items such as stock compensation was well ahead of analysts’ estimates of 22 cents.

HPE upped its profit guidance for the second quarter to between 29 and 33 cents and also boosted full-year estimates to between $1.35 and $1.45, well above previous guidance of $1.15. “We see a broadly improving IT investment environment,” said Chief Financial Officer Tim Stonesifer.

Investors sent the stock up nearly 19 percent in initial after-hours trading, before profit-taking set in. Still, shares were up nearly 11 percent at the conclusion of the company’s earnings call at 5:30 p.m. EST.

HPE has been buffeted by competition from the likes of Dell Technologies Inc., whose 2016 acquisition of storage giant EMC Corp. signaled its intention to become a more broad-based supplier. Cloud computing providers such as Amazon Web Services Inc., Microsoft Corp.’s Azure and Google Cloud Platform also have stolen away data center traditional hardware and software revenues.

But in this quarter, HPE’s growth was strong across the company’s portfolio, with compute revenue up 11 percent, storage up 24 percent and data center networking up 27 percent. The fledgling “intelligent edge” operations, driven by its Aruba networking subsidiary, showed 9 percent growth.

The surge in storage revenue was helped by strong performance by its Nimble Storage Inc. subsidiary, as well as a return to growth for its 3Par line. Sales of all-flash arrays grew 16 percent. Among the company’s small but strategic new initiatives, hyperconverged infrastructure sales jumped threefold, and HPE’s Synergy program, which provisions on-premises infrastructure on a pay-as-you-go basis, grew 40 percent.

New leadership

This was HPE’s first quarter under new Chief Executive Antonio Neri (pictured), who took over when former CEO Whitman stepped down Feb. 1. Neri attributed much of the recent success to the HPE Next program that he ushered into existence at the end of last year. That program is expected to remove about $750 million in costs this year by streamlining operations, reducing management overhead and cutting back on the number of different product configurations the company sells.

HPE has already sharply cut back on layers of management between himself and customer-facing employees in other countries, Neri said. “It’s all about simplification, innovation and execution,” he commented. “This is an opportunity for me, as the new CEO, to establish a new culture as we transform the company.”

Analyst Patrick Moorhead of Moor Insights & Strategy termed the results a “blowout,” with big gains in nearly all segments. “If this is what HPE will look like under Neri, investors, customers, partners and employees will be pleased,” he said.

In reality, Neri’s impact on this quarter was limited because Whitman was CEO for the entire quarter, but the new CEO was quick to cite new programs he’s putting in place install more excitement and loyalty among its workforce. Among them is a “significant” new investment in HPE’s 401(k) matching contributions for employees and an unspecified boost in training. “The need to reskill our workforce has never been higher,” Neri said.

He also returned to the theme of innovation, a favorite longtime watchword of the company that was downplayed during two years of aggressive restructuring. “I believe our portfolio is the strongest we’ve had in years, and customers recognize that,” Neri said. “They love our innovation.”

Underlying the innovation theme, Neri downplayed the importance of acquisitions in future growth, asserting that “if we have the means to do something ourselves, we will do that.” The company will also continue to look for better synergies throughout its product line, such as its recent adoption of the InfoSight data analytics platform, which it picked up last year with the acquisition of Nimble Storage Inc., across its entire storage portfolio.

HPE said it plans to return $7 billion to shareholders through its 2019 fiscal year through share buybacks and a 50 percent increase in its dividend. In the first quarter, the company said a $1.8 billion benefit from recent changes to the U.S. tax code was partially offset by a $1 billion expense from taxes paid on repatriated overseas cash.

Barclays Capital Inc. analyst Mark Moskowitz said in a note to clients that the buybacks and dividend hike could signal fewer “disruptive” acquisitions going forward. “The new capital return program could signal that tuck-in or string-of-pearls approach is the company’s preferred inorganic investment route,” he wrote.

Photo: SiliconANGLE