HEWLETT Packard Enterprise on Thursday (Feb 29) forecast second-quarter revenue below Wall Street estimates, as businesses scale down spending on the server maker’s technology solutions.

Shares of the Spring, Texas-based company fell about 3 per cent in extended trading.

An uncertain economy and high interest rates have led clients to cut back on expenses in a push for stronger profitability.

Enterprises are hesitant to sign new contracts, commit to long-term initiatives or take on new technology partners, although IT spend is expected to increase in 2024, according to research firm Gartner.

HPE expects revenue in the second quarter in the range of US$6.6 billion to US$7 billion, below analysts’ average estimate of US$7.11 billion, according to LSEG data.

It also reported a 13.5 per cent fall in first-quarter revenue to US$6.76 billion, missing estimates of US$7.11 billion.

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CFO Marie Myers said that the “softening of the networking market and GPU deal timing” impacted the company in the first quarter.

On an adjusted basis, the company reported 48 US cents per share in the November-to-January quarter, above estimates of 45 US cents per share.

Annualised revenue run-rate, a measure of future revenue, was up 42 per cent to US$1.4 billion in the reported quarter.

HPE is expected to roughly double its networking market share with its planned US$14 billion deal for Juniper Networks, according to analysts. REUTERS