NEW YORK: Hewlett Packard Enterprise Co (HPE) has given an outlook for revenue in the current quarter that exceeds analysts’ estimates, a sign the company is benefitting from solid demand for hardware that helps customers run AI workloads.
Sales will be US$9.6bil to US$10bil in the period ending in April, the company said on Monday in a statement, compared with the US$9.57bil average estimate of analysts polled by Bloomberg.
Profit, excluding some items, will be 51 US cents to 55 cents a share, HPE said, in line with the average estimate of 53 cents.
The company reiterated its revenue growth outlook for the full year, while raising its annual earnings forecast to US$2.30 to US$2.50 a share. Analysts, on average, anticipated US$2.35.
HPE is seeing strong demand for its networking products, driven by a boom in artificial intelligence (AI) tasks that need faster ways to route data.
The Texas-based company purchased Juniper Networks for about US$13bil last year and sees networking as a major part of its future expansion.
In the most recent quarter, HPE widened margins by raising prices and opting to forgo supplying some customers as the industry deals with severe price increases and shortages of memory chips.
“We executed with very, very, strong discipline in a very dynamic environment driven by the supply chain shortages and inflationary cost,” chief executive officer Antonio Neri said in an interview.
In the fiscal first quarter, sales rose 18% to US$9.3bil, while profit, excluding items, was 65 cents a share. Analysts had expected sales of US$9.37bil and profit of 58 cents.
Cloud and AI revenue, which includes servers and storage, declined 2.7% to US$6.3bil, although margins in the unit widened. The company has an AI server backlog of US$5bil, Neri said.
The shares were little changed in extended trading after closing at US$21.81 in New York. The stock has fallen 9.2% so far this year.
HPE expects the memory chip shortage to continue well into next year. The company is raising prices, in some cases even between when it quotes prices and when it ships products.
HPE also is forgoing supplying some equipment to mobile service providers to focus on higher-profit clients like enterprise customers and sovereign deals.
“We are not done raising prices,” Neri said. Still, HPE isn’t really losing any market share, he said.
“There are markets and segments and products that you may gain share, and other ones maybe you’re losing share, depending on what the opportunity is,” Neri said. “But on average, we’re all in the same boat.”
The company is also vying for more contracts with countries building their own AI clouds, but those deals take longer to sign and get US export control approval, so that revenue is likely to show up in the latter half of the year, Neri said. — Bloomberg
