Hewlett Packard Enterprise Results Doesn’t Seem Promising Though Management Begs To Differ

Hewlett Packard Enterprise Inc. posted lower-than-expected Q1 results today and it looks like things are not getting aligned for the company. Many analysts feel that Meg Whitman, the Chief Executive is running out of excuses that she can give for her continuous failure since the time the company became an independent entity. This is the fifth quarter result since the split of Hewlett-Packard Enterprise (HPE) from Hewlett Packard (HP). HPE now deals with selling of software, tech services, and commercial computer systems, while HP deals with PCs and printers.

Whitman gave a statement after the results saying, “I believe HPE remains on the right track. The steps we’re taking to strengthen our portfolio, streamline our organisation, and build the right leadership team, are setting us up to win long into the future.”

The company gave an EPS (Earnings per Share) of 45 cents on the revenue of $11.41 billion, while the market expectation was 44 cents on $12.07 billion. The revenue of the company went down by 10% if we compare to the same quarter a year back. The company’s enterprise and computer services are a major concern as the sales in enterprise networking alone went down by 33% in this quarter.

The weak results led to the shares of the company tumbling by more than 6% in the after-hours trading.

The entire executive team including Whitman came out with a string of factors that they blame for the weak results this quarter. It includes currency fluctuations, order shortfall from a large, unidentified tier 1 service provider, and hard-to-get and expensive memory components.

They gave these reasons while replying to the analysts’ questions over a conference call.

Toni Sacconaghi, an analyst at Bernstein Research asked during the call, “Most people were aware of a much tougher commodity environment in November. In fact, your sister company HPQ had been calling that out well before November and had made provisions to adjust for that both in pricing and in building inventory. So I guess the question is, the only thing that really seems new, or that you shouldn’t have known about, was either the market changing or execution.

The Chief Financial Officer, Tim Stonsifer responded to this by saying that they were well aware of the prevailing currency environment and has in fact hedged themselves for it. This helped the company to sail through conveniently in the first quarter.

It’s high time that the management stops giving excuses and starts delivering.


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