HP Enterprise Stock Falls After Earnings Top Estimates. It’s a Shame About the Revenue.
CEO Antonio Neri said demand remains very strong.
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Hewlett Packard Enterprise shares traded lower Tuesday even though the computing hardware company reported fiscal fourth-quarter profits that hit the high end of the range investors had been told to expect.
For the fiscal fourth quarter ended Oct. 31, HP Enterprise (ticker: HPE) posted revenue of $7.35 billion, up 2% from a year ago, or flat adjusted for currency. The number was up 7% sequentially, but a hair below the $7.38 billion that Wall Street expected.
HPE fell 1.6%, to $14.38 in Tuesday’s regular session, but in late trading, the stock was down 3.5%, to $13.85
Non-GAAP profits were 52 cents a share, above the Street consensus for 48 cents, and at the top end of the company’s forecast range of 44 to 52 cents a share.
On a GAAP basis, HP Enterprise earned $1.91 a share, including an after-tax gain of $1.39 a share related to a financial judgment received from Oracle in a longstanding legal dispute. Cash flow from operations was $3 billion, including $2.2 billion in after-tax proceeds from the legal judgment. The company bought back $213 million of stock in the quarter.
CEO Antonio Neri noted in an interview that the company used $1 billion of the proceeds to pay down debt earlier this month.
The company’s high-performance computing and artificial-intelligence segment had revenue of $1 billion, up 1%, a level that likely disappointed investors. HP Enterprise said it remains on track for compounded annual growth in the segment of 8%-12% through fiscal 2022.
HP Enterprise said revenue from its “intelligent edge” computing unit was $815 million, up 4%. Revenue from the Compute segment was $3.2 billion, up 1%, while storage revenue was $1.3 billion, up 3%. Financial services revenue was $858 million, up 1%.
For the full year ended in October, HP Enterprise had revenue or $27.8 billion, up 3%, with profits of $1.96 on a non-GAAP basis. The figure under GAAP was $2.58.
Neri said he was very pleased with how the company finished up the fiscal year, noting that orders were up 16% from a year ago, with backlog running at “high historical levels.” He said that market demand remains very strong, noting for instance that orders in the high-performance computing and AI segment were up 50% from a year ago. Neri also said that component supply constraints remained an issue in the quarter, and are likely to linger at least through the first half of 2022.
For the fiscal first quarter ending in January, HP Enterprise projects profits of 42 to 50 cents a share on a non-GAAP basis, or 19 to 27 cents a share under generally accepted accounting principles. The company reiterated its previous forecast for the October 2022 fiscal year for profits of $1.96 to $2.10 a share on a non-GAAP basis, or $1.24 to $1.38 a share on a GAAP basis.
The company also said it expects to buy back at least $500 million of stock in fiscal 2022.
“HPE ended fiscal year 2021 with record demand for our edge-to-cloud portfolio, and we are well positioned to capitalize on the significant opportunity in front of us,” Neri added in a statement. “In 2021, we accelerated our pivot to as a service, strengthened our core capabilities, and invested in bold innovation in high-growth segments.”
Write to Eric J. Savitz at [email protected]
