Hewlett Packard Enterprise Co (NYSE:HPE) Slides Downhill

tags: HPQ,HPE

It’s been about seven months since Hewlett Packard was split into two and Hewlett Packard Enterprise Co (NYSE:HPE) began its life as a standalone company. At first, not everyone was sure about the idea. The significant restructuring costs, for one, were among investors’ main concerns.

Gradually, however, HPE was accepted and it actually put on a rather decent performance. On June 23, the ticker registered year-to-date gains of very nearly 30% and it closed the session at $19.65 per share. The push was especially strong after the company announced the spin-merger of its Enterprise Services segment in May. The deal which is supposed to be closed next year will save quite a lot of people from being laid off.

Last week, Robert Burnstine, President of Fairpointe Capital was interviewed by The Street and he said that according to him, both HPE and HP Inc (NYSE:HPQ) have the legs to run much higher. He said that the stocks are traded at “deep discounts” and he applauded the decisions that Meg Whitman has taken so far.

Apparently, however, investors see things a bit differently. On Friday, the ticker wiped out about 7.6% of its value and yesterday, after another 5.3% drop, it came to a close of $17.20 per share.

One of the main reasons for this is Britain’s decision to leave the European Union. As most of you have probably heard already, the Brexit is expected to have a profound effect on business conditions in the UK and HP will probably be affected by it as well.

Of course, there is the argument that the markets are overreacting to Britain’s referendum results and that sooner or later, the dust will settle and everything will go back to normal. This, of course, might turn out to be true, though nobody can be absolutely sure.

HPE‘s own future shows some changes, though. It was announced yesterday that the company will go through yet more restructuring. Martin Fink, the current CTO who has worked at HP for more than three decades, will retire at the end of the year. John Hinshaw, the Chief Customer Officer will also leave in December and his duties will be assumed by other people.

Investors aren’t terribly happy about the new restructuring efforts. They’re not ecstatic about Britain’s political moves, either. Some of you might see this as the perfect opportunity to buy now and sell when the markets are a bit more stable. The whole Brexit commotion means, however, that the volatility could turn things either way. Keeping your eyes peeled is advisable.