HPE projects sales that top estimates on office upgrades
HEWLETT Packard Enterprise (HPE) projected revenue for the current quarter that beat analyst expectations, suggesting corporations are continuing to upgrade their technology infrastructure in an uncertain economy.
Sales will be about US$7.4 billion in the fiscal first quarter ending in January, compared with analysts’ average estimate of US$7 billion, according to data compiled by Bloomberg. Profit, excluding some items, will be about 54 US cents a share. Analysts projected 49 US cents.
HPE’s pivot away from traditional hardware to services such as cloud computing and artificial intelligence is paying off, chief executive officer Antonio Neri said in an interview. “We exited fiscal 2022 with steady demand,” he said.
In the fiscal fourth quarter, which ended Oct 31, revenue increased 7 per cent to US$7.87 billion, the Spring, Texas-based company said on Tuesday (Nov 29) in a statement. Analysts, on average, projected US$7.37 billion. Profit, excluding some items, was 57 US cents a share, a penny higher than estimates.
Sales in the Intelligent Edge unit gained 18 per cent. The division, which is a key part of HPE’s transformation plan, covers products that let companies gather and process data where it is generated instead of sending it to an external storage centre. Revenue from the company’s largest division, Compute, which includes data centres and servers, jumped 16 per cent. Both exceeded analysts’ expectations.
However, sales in the segment including high-performance computing and AI declined 14 per cent in the quarter, while analysts expected a revenue gain. The decline was due to one large contract with the US Department of Energy for the Frontier supercomputer that was pushed back to the current quarter, Neri said.
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The shares gained about 3 per cent in extended trading after closing at US$15.46 in New York. The stock has been a relatively safe haven in technology this year, dropping only about 2 per cent compared with a 26 per cent decline for the S&P 500 Information Technology Sector Index.
HPE also affirmed its earlier full fiscal year guidance of adjusted earnings per share of as much as US$2.04 and free cash flow as high as US$2.1 billion. It also said it would spend at least US$500 million on share buybacks in the fiscal year.
HPE’s decision to keep its previous guidance may be prudent, as peers such as NetApp have reduced their outlooks, said Bloomberg Intelligence analyst Woo Jin Ho. The results are also rosier than those of office infrastructure peer Dell Technologies, he said.
Neri said it’s “a little too early” to think about updating the full-year guidance, as supply chains and currency fluctuations continue to provide headwinds. He added that the company doesn’t have any job cuts planned. “No restructures — we’re done with that.” BLOOMBERG
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