Hewlett Packard Enterprise Co. shares fell more than 6% in after-hours trading Tuesday after the technology giant reported first-quarter revenue that did not meet Wall Street estimates and warned it no longer expects revenue to grow in fiscal 2020.
In a phone interview shortly after the results were released, HPE Chief Financial Officer Tarek Robbiati highlighted gains in intelligent-edge computing (up 2% year-over-year to $ 720 million) and operating profit margin for its storage business (up to 18%). But he blamed a 16% year-over-year decline in compute revenue ($ 3 billion) and 9% decline in total revenue on “microenvironment” issues such as supply-chain disruption, and coronavirus.
“There are too many unknowns at this time to predict the impact on the second quarter,” Robbiati said.
HPE HPE, -2.33%, which provided more financial detail than usual for its business segments, said its storage business fell 8% to $ 1.25 billion.
Overall, the company reported net income of $ 333 million, or 25 cents a share, in the quarter, compared with net income of $ 177 million, or 13 cents a share, in the year-ago first quarter.
Revenue dipped nearly 9% to $ 6.95 billion, from $ 7.55 billion a year ago.
Analysts surveyed by FactSet had expected net income of 24 cents a share on sales of $ 7.21 billion.
The performance of HPE’s server business continues to intrigue Wall Street. Barclays Capital Inc. analyst Tim Long expected server revenue to decline 5% to $ 3.2 billion year-over-year and be flat sequentially. “Given Dell’s DELL, -1.44% weaker server revenue for Jan-Q and tough market demand, we see some downside risk to our estimate,” Long wrote in a note Tuesday. “Near-term outlook may also be negatively impacted by Covid-19. That said, the server market in CY2020 seems to have a good chance of recovery back to a growth mode after a tough 2019.”
HPE shares are down 22% in the past year, while the broader S&P 500 index SPX, -2.81% is up 7.6% over the past 12 months.
