- HPE CEO Antonio Neri reveals plans for an "agile pricing posture" in response to memory shortages
- Customers are also being encouraged to reconsider configurations
- The company has a $5 billion server order backlog at the moment
HPE has changed its terms to now allow price increases after a quote has already been issued if component costs rise before shipment, in response to ongoing pricing volatility and global hardware shortages.
The move is largely driven by rising prices for DRAM and NAND, which typically make up around 50% of a traditional server's bill of materials.
Speaking on an earnings call following its Q1 results, HPE CEO Antonio Neri said the company would be adopting an "agile pricing posture" with shorter quote commitment cycles to protect its margins.
HPE says it'll change quoted prices if costs rise
"We have amended our quoting terms with the right to reprice existing orders for commodity cost increases between quoting and shipment," Neri said.
Besides looking to bolster margins by passing on price fluctuations to customers, HPE has also expanded long-term supply agreements with silicon and memory partners so it doesn't have to pass on those price hikes so much.
In the meantime, the company is warning customers that they should reconsider alternative configurations to manage demand. Neri credited European customers for altering course in response to chip shortages without being put off by price hikes.
Despite troubling times in the world of chips, HPE still posted a 150% year-over-year increase in networking revenue to $2.7 billion, though a large part of that was driven by its acquisition of Juniper Networks. The networking business represents around 30% of HPE's total revenue, but more than half of its operating profits.
HPE also admitted it has a $5 billion server order backlog at the moment, but CFO Marie Myers expects AI hardware orders to ship in the second half of 2026.
All in all, HPE "exceeded [its] expectations for profitability and cash flow measures," and company shares are up around 3% since the announcement.
