HPE hybrid IT revenue falls 11% triggering share slump

Company misses analyst estimates but remains optimistic for 2020

HPE missed analyst estimates in its fourth-quarter earnings report on Monday, largely driven by slowing demand for core products and wider economic uncertainty.

Shares slumped 4% in after-hours trading, prompted by a drop of 11% in the company's Hybrid IT division, by far HPE's largest unit comprising its servers, storage and data centre products. Revenue for the unit came in at $5.67 billion, just short of the $5.74 billion expected by analysts.

The company's Intelligence Edge unit, a field that HPE has aggressively targeted, also saw revenue slump by 6.5%, falling from $773 million to $723 million year over year.

In September, HPE CEO Antonio Neri warned that turbulent economic factors, including trade tensions, were creating "uneven demand" and would rattle customer confidence for some time to come.

Commenting on this week's earnings, he said: "We had a very successful fiscal year, marked by strong and consistent performance. Through our disciplined execution, we improved profitability across the company and significantly exceeded our original non-GAAP earnings and cash flow outlook, while sharpening our focus, transforming our culture and delivering differentiated innovation to our customers as they accelerate their digital transformations.

"I am confident in our ability to drive sustainable, profitable growth as we continue to shift our portfolio to higher-value, software-defined solutions and execute our pivot to offering everything as a service by 2022," Neri continued. "Our strategy to deliver an edge-to-cloud platform-as-a-service is unmatched in the industry."

There were some positive signs for the company. Quarterly profit was slightly higher than analyst estimates, earning 49 cents per share compared to the 46 cents per share that was anticipated, as reported by Reuters.

HPE also gave a positive outlook for the year ahead, estimating a $1.01 to $1.17 per share in profits and $1.78 to $1.94 per share in adjusted profits.

The earnings report brings to an end a year marked by a series of strategic acquisitions that will likely serve to further diversify HPE's earnings in 2020. In May the company acquired supercomputing giant Cray, a deal that came as somewhat of a surprise but will certainly lead to more developments in its high-performance computing division.

HPE also acquired the intellectual property of big data analytics specialist MapR in August. This deal included a bunch of AI technology and expertise that HPE said would be put towards its Intelligent Data Platform.

Featured Resources

Shining light on new 'cool' cloud technologies and their drawbacks

IONOS Cloud Up! Summit, Cloud Technology Session with Russell Barley

Watch now

Build mobile and web apps faster

Three proven tips to accelerate modern app development

Free download

Reduce the carbon footprint of IT operations up to 88%

A carbon reduction opportunity

Free Download

Comparing serverless and server-based technologies

Determining the total cost of ownership

Free download

Recommended

HPE Primera A630 review: 100% storage uptime with no excuses
Server & storage

HPE Primera A630 review: 100% storage uptime with no excuses

1 Nov 2021
HPE wins networking contract with Birmingham 2022 Commonwealth Games
Network & Internet

HPE wins networking contract with Birmingham 2022 Commonwealth Games

15 Oct 2021
From edge to cloud – and everywhere in between
Sponsored

From edge to cloud – and everywhere in between

27 Sep 2021
Silicon on-Demand: the evolution of HPE GreenLake
Sponsored

Silicon on-Demand: the evolution of HPE GreenLake

27 Sep 2021

Most Popular

How to move Microsoft's Windows 11 from a hard drive to an SSD
Microsoft Windows

How to move Microsoft's Windows 11 from a hard drive to an SSD

24 Nov 2021
What should you really be asking about your remote access software?
Sponsored

What should you really be asking about your remote access software?

17 Nov 2021
Nike to take customers into the metaverse with 'NIKELAND'
virtualisation

Nike to take customers into the metaverse with 'NIKELAND'

19 Nov 2021