HPE and NetApp deliver mixed financial results as revenue growth slows

HPE and NetApp deliver mixed financial results as revenue growth slows

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Enterprise computing infrastructure firms Hewlett Packard Enterprise Co. and NetApp Inc. both reported mixed financial results today. However, while HPE’s stock made slight gains in the extended trading session on the back of strong guidance for the next quarter, NetApp’s shares plummeted due to a weaker-than-expected forecast.

HPE reported a net loss of $304 million, with fourth quarter earnings before certain costs such as stock compensation coming to 57 cents per share, matching Wall Street’s expectations. Revenue for the period rose 7% from a year earlier to $7.9 billion, beating the analyst’s consensus estimate of $7.4 billion.

HPE’s stock rose by more than 2% in extended trading, erasing a slight decline that came during the regular session. HPE President and Chief Executive Antonio Neri (pictured) said the company had put in an “impressive quarter” that resulted in an “outstanding performance” across all of its key performance metrics.

“We are producing strong financial results as we meet new customer needs with the edge-to-cloud portfolio that only we can deliver,” Neri said. “The strength of our culture and commitment of our team members this quarter and throughout the entire 2022 fiscal year enabled us to innovate and take bold actions to pivot our portfolio and bolster our financial position as we head into 2023.”

HPE is a provider of information technology hardware such as servers, storage and networking gear, plus associated software services. Its flagship offering these days is HPE GreenLake, a portfolio of hardware and software products that enterprises can buy on a pay-as-you-go basis, rather than purchase everything upfront.

Revenue from HPE GreenLake is included in the company’s Intelligent Edge business segment and that was one of its best performers, with revenue rising 18% to $965 million for the period. HPE’s largest business segment, its Compute division, also did well, with revenue up 16% to $3.7 billion for the period. Storage revenue increased too, rising 4% to $1.3 billion.

On the other hand, HPE’s High Performance Computing and Artificial Intelligence division saw revenue decline 14% to just $862 million. Financial Services revenue meanwhile stayed flat, at $857 million.

The mixed results were followed by some very strong guidance, with HPE saying it expects first quarter sales of between $7.2 billion and $7.6 billion, well ahead of Wall Street’s forecast of $6.98 billion.

Weak guidance sends NetApp down

Unfortunately for NetApp, it wasn’t quite able to match HPE’s strong performance. The provider of enterprise storage systems did beat Wall Street’s estimates on earnings, reporting a second quarter profit before certain costs of $1.48 per share, ahead of the $1.33 targeted by analysts. However, its revenue grew by just 6% to $1.66 billion, below the $1.68 billion target.

All told, NetApp reported income for the period of $750 million.

“We delivered a solid quarter in a dynamic environment, with all-time highs for Q2 revenue, billings, gross profit dollars, operating income, and EPS,” said NetApp Chief Executive George Kurian (pictured, right. “Our modern approach to the hybrid multicloud delivers significant value to our customers and creates sizeable opportunity for us. In a challenging macro environment, we remain focused on innovation, execution, and operational discipline.”

That may be so, but NetApp’s investors meanwhile are focused on the company’s immediate financial prospects and did not like what they saw. For the third quarter, NetApp said it’s expecting earnings of between $1.25 and $1.35 per share, below Wall Street’s forecast of $1.44 per share. Similarly, its revenue forecast of $1.525 billion to $1.675 billion also came below the consensus estimate of $1.71 billion.

As a result, NetApp’s stock fell more than 10% in extended trading. No doubt, investor’s concerns were exacerbated by the company’s revised full year outlook. NetApp said it’s revising its full year earnings forecast to a range of $5.30 to $5.50 per share, down from its previous forecast of $5.40 to $5.60 per share.

Photos: SiliconANGLE

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