Hewlett Packard Company reported strong financial results for the April quarter, with revenue of $7.2 billion, up 3% year-over-year. The company’s earnings per share were above expectations, driven by demand for AI servers. CEO Antonio Neri mentioned the availability of H100 chips was much better than in previous quarters, resulting in backlog orders for AI systems worth $4.6 billion. The Intelligent Edge segment had revenue of $1.1 billion, while the Hybrid Cloud segment had revenue of $1.3 billion.
HP Enterprise’s CFO Marie Myers highlighted prudent cost discipline and strong free cash flow in the quarter, which reached $610 million. Neri noted that orders for enterprise AI systems represent over 15% of the company’s cumulative total, with a focus on profitable deals and accompanying services. The company’s networking business is expected to see modest growth in the future after a digestion period of high customer inventories.
Neri also mentioned strong demand for AI servers across three segments: hyperscalers, sovereign states, and enterprise customers. The company projects revenue of $7.4 billion to $7.8 billion for the fiscal third quarter and adjusted earnings of 43 to 48 cents per share. For the October 2024 fiscal year, HPE expects revenue to grow between 1% and 3% in constant currency, with adjusted earnings guidance of $1.85 to $1.95 per share.
In a recent earnings report from Dell Technologies, questions were raised about profitability on AI server sales. Neri mentioned that HPE’s services segment produced an operating margin of 11% last quarter, focusing on profitable deals and services to keep the AI server business profitable. The company believes its networking business is in the final digestion period, with clean inventory worldwide.
Overall, HP Enterprise is optimistic about the future, driven by strong demand for AI servers and growth across its segments. The company continues to focus on profitability, cost discipline, and providing accompanying services to maintain its competitive edge in the market.
For more information, contact Eric J. Savitz at eric.savitz@barrons.com.
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