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  • HPE Reports Declining Sales; Issues Cost-Cutting Plan

    HPE Reports Declining Sales; Issues Cost-Cutting Plan(Bloomberg) — Hewlett Packard Enterprise Co. reported declining sales, and said it would “realign the workforce” and cut costs over the next three years, signaling that the stumbling global economy has dented demand for servers.Revenue fell 16% to $6 billion in the period ended April 30, the San Jose, California-based company said Thursday in a statement. Analysts, on average, expected $6.19 billion, according to data compiled by Bloomberg. Profit, excluding some items, was 22 cents a share, compared with an average estimate of 28 cents.The company said it was putting in place a plan to cut costs, with a goal of $1 billion in savings by the end of fiscal 2022. Measures will including simplifying its product portfolio and supply chain as well as changing customer support, marketing efforts and real estate strategies, HPE said in the statement.“It definitely was a tough quarter by every measure and I’m disappointed in the performance, but I don’t see this as an indication of our capabilities,” Chief Executive Officer Antonio Neri said in an interview. “This was clearly driven by supply chain disruptions because of coronavirus,” including a shortage of chip components from China, disrupted logistics and social-distancing guidelines in some regions.Neri said he expected HPE’s sales to “recover sequentially,” with the third quarter posting better results than the second and the fourth improving further. Still, he said, it’s unknown just how bad the economic downturn will be.HPE withdrew its annual profit forecast last month, citing uncertainty from the Covid-19 pandemic, which has forced millions of people to stay home to prevent the spread of the virus.Neri has struggled to spark sales growth at the computing and networking company, which has seen year-over-year revenue decline in all but one quarter since the company split from HP Inc. in 2015. Competing with larger hardware rival Dell Technologies Inc. and dominant cloud-computing companies such as Amazon.com Inc. and Microsoft Corp., HPE has hitched its future to edge computing, which distributes data-processing capacity closer to customers rather than at centralized data centers. More immediately, the company has sought to support sales by offering $2 billion of financing for clients trying to preserve cash in the pandemic.Under the company’s plan to reduce expenses, senior executives including Neri will take 20% to 25% cuts to their base salaries and the board reduced each director’s cash retainer by 25% from July to the end of the fiscal year. The hardware maker will consolidate offices where possible, Neri said. He expects more than half of HPE’s employees won’t return to the office full time, instead dropping in for meetings and collaboration when necessary.The number of employees who may lose their jobs under the cost-cutting plan is undetermined, Neri said. The company will spend the next few months working out the details and evaluating how much it can save in other areas.In the fiscal second quarter, HPE reported falling revenue in all of its business segments. Server sales dropped 20% to $2.64 billion and storage hardware declined 18%. Neri said the company saw “steady” demand from large enterprises while small and mid-sized businesses struggled. HPE wasn’t able to produce as much data-center hardware as clients were ordering, he said.HPE’s shares dropped about 5% in extended trading after closing at $10.36 in New York. The stock has dropped 35% this year.(Updates with comments from CEO in the fourth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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  • Are ASX 200 REIT shares a dividend trap?

    Real Estate Investment Trust

    ASX 200 real estate investment trusts (REITs) have been smashed in 2020. While the S&P/ASX 200 Index (ASX: XJO) is down 17.57% this year, many of the Australia’s corporate landlords have lost billions in value.

    What’s the attraction of ASX 200 REIT shares?

    The “trust” part of real estate investment trust is the key here. The Aussie REITs are setup in a way that requires them to distribute 90% or more of their profits each year. That means ASX 200 REIT shares often have some of the highest dividend yields on the market.

    A dividend yield is calculated by dividing the latest full-year dividend by the current share price. Here’s where things get interesting after the recent bear market.

    Many of the largest REITs have been hammered lowered in 2020. Scentre Group (ASX: SCG) shares are down 41.49% in 2020 while the Stockland Corporation Ltd (ASX: SGP) has fallen 35.12% in the year to date. The news isn’t much better for Mirvac Group (ASX: MGR) shareholders who’ve watched the ASX 200 REIT share fall 32.09% this year.

    But if you didn’t know about COVID-19, you might think the Aussie REITs are solid buys. Scentre, Stockland and Mirvac shares are yielding 8.46%, 9.11% and 5.69%, respectively. Those are some handy numbers when times are tough and income is tight.

    However, ASX 200 REIT shares may be a dividend trap. Rental income is likely to slump for these property owners and developers in the current climate. Many retail stores will close and tenants are already threatening not to pay. That’s bad news for the Aussie REITs and their FY 2020 distributions.

    Is it all bad news for the Aussie REITs?

    I don’t think ASX 200 REIT shares are the best buy for income in 2020. However, that doesn’t mean they still can’t be a good investment.

    If you’re investing for the long-term, the Aussie REITs could still be a stable income option. I wouldn’t bank on any ASX dividend share income in 2020 given the circumstances, but the long-term prospects for REITs could still be intact.

    If you’re after dividend shares to replace your REIT income this year, check out this top dividend pick today!

    NEW: Expert names top dividend stock for 2020 (free report)

    When our resident dividend expert Edward Vesely has a stock tip, it can pay to listen. After all, he’s the investing genius that runs Motley Fool Dividend Investor, the newsletter service that has picked huge winners like Dicker Data (+92%), SDI Limited (+53%) and National Storage (+35%).*

    Edward has just named what he believes is the number one ASX dividend stock to buy for 2020.

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    Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Scentre Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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  • Why Afterpay and these ASX shares just hit multi-year highs

    beat the share market

    Although the S&P/ASX 200 Index (ASX: XJO) ended its winning run on Thursday, that didn’t stop a number of shares from charging higher.

    Some even managed to climb to multi-year highs or better during yesterday’s trade.

    Three that achieved this milestone are listed below. Here’s why they are flying high:

    Afterpay Ltd (ASX: APT)

    The Afterpay share price continued its positive run and stormed to a record high of $45.17 on Thursday. The catalyst for this latest gain was a business update which revealed that it has now reached 5 million active customers in the U.S. market. This was driven by the addition of 1 million active customers during the pandemic. Also supporting its share price in 2020 has been strong third quarter sales growth and the arrival of Tencent Holdings as a substantial holder. In respect to the latter, investors appear optimistic the WeChat owner will be the key to unlocking the Asia market.

    Evolution Mining Ltd (ASX: EVN)

    The Evolution Mining share price climbed to a multi-year high of $6.20 yesterday. Investors have been buying Evolution’s shares this year due to a significant jump in the gold price. Falling interest rates and economic concerns have placed a rocket under the gold price in 2020, putting Evolution in a position to deliver a strong profit result in FY 2020 and FY 2021. At the end of March, the gold miner’s all-in sustaining cost was US$652 an ounce. This compares to the current spot gold price of ~US$1,725 an ounce.

    Kogan.com Ltd (ASX: KGN)

    The Kogan.com share price was on form again and reached a record high of $9.56 on Thursday. This ecommerce company’s shares have been on fire over the last couple of months after it revealed stellar sales growth during the pandemic. In April, for example, Kogan grew its sales by more than 100% and its adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA) by more than 200%. The latter means its EBITDA is now up 40% financial year to date. Investors appear confident its strong form will continue thanks to the shift to online shopping.

    Missed out on these gains? Then you won’t want to miss out on these dirt cheap ASX shares before they rebound…

    5 cheap stocks that could be the biggest winners of the stock market crash

    Investing expert Scott Phillips has just named what he believes are the 5 cheapest and best stocks to buy right now.

    Courtesy of the crashing stock market, these 5 companies are suddenly trading at significant discounts to their recent highs… creating what could be incredible opportunities for bargain-hungry investors.

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    See the 5 stocks

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    Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

    The post Why Afterpay and these ASX shares just hit multi-year highs appeared first on Motley Fool Australia.

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