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Home / Business / HPE Revenue Strokes Shares Up 8%

HPE Revenue Strokes Shares Up 8%



Hewlett Packard Enterprise Co. Shares rose as much as 8% in afternoon trading Tuesday after reporting revenue that beat Wall Street estimates, but the company warned of softness in the computer and storage markets in the third quarter. [19659002] The results, which included a decline in revenues, further illustrate the difficulties hardware manufacturers face in weakening world economies and uncertainty surrounding the US-China trade war. NetApp Inc. & # 39; s

NTAP, -0.11%

disappointing results earlier this month raised alarms among many analysts.

Read more: NetApp share plunges 1

3% after warning that revenues, revenues will come in well below forecast

Trade tensions have contributed to uneven demand in enterprise IT sales, said HPE CFO Tarek Robbiati to analysts in a conference call after the results were released. Customers take longer to determine their investment strategy, he said.

"It's time we asked for a new reality. The days [robust growth] in 2017-8 no longer apply," Robbiati told MarketWatch in a telephone interview. "The sales cycles are elongated. The bigger the deal [IT] the more control becomes the deal. ”

The San Jose, California-based company

HPE, -0.08%

reported 45 cents non-GAAP earnings per share. But revenue slipped 7% the year before to $ 7.22 billion. Analysts polled by FactSet projected earnings of 40 cents per share and revenue of $ 7.275 billion.

Sales for several key product segments decreased. Server revenue dropped 12% and storage hardware dropped 5% compared to the same quarter a year ago.

Revenue for Hybrid IT, which includes the company's servers and storage hardware products, led to $ 5.5 billion, while HPE continues the transition to become a software-as-a-service company by 2022. HPE's Nimble Storage improved 21% the year before when it was adjusted for currency.

"We transfer the portfolio [product] to higher margin deals," HPE Director Antonio Neri said during the conference call, noting improvements in gross margins to 33.9%, up 340 basis points from a year earlier. The company lifted full-year guidance to $ 1 , $ 72 to $ 1.76 per share, excluding certain items. Analysts asked by Refinitive expect $ 1.68 per share.

Volatile results are nothing new for HPE, which was formed in November 2015 after it split. from Hewlett-Packard Co. Along the way, it bought flash manufacturer Nimble Storage for $ 1.2 billion in 2017 and announced plans to buy Cray super data company Cray for $ 1.3 billion in May, last year, HPE rolled out GreenLake Hybrid Cloud, a cloud management service which is interoperable with Amazon.com Inc.s

AMZN, -0.40%

Amazon Web Services, Alphabet Inc. & # 39; s

GOOGL, -0.03%

GOOG, -0.09%

Google Cloud and Microsoft Corp.

MSFT, + 0.21%

Azure.

"HPE continues to drive solid profits and growth in select high-growth areas such as edge computing and networking, and HPC [high-performance computing]," Patrick Moorhead, principal analyst at Moor Insights & Strategy, told MarketWatch. Now the company needs to focus on increasing the size of these growth areas to drive overall sales growth. [SaaS] could well be that catalyst. "


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