Hewlett Packard Enterprise (HPE) shares slumped lower Thursday after the IT services posted modestly weaker-than-expected second quarter earnings and forecast muted near-terms sales growth.
HPE, the services-focused division that was spun out of the former Hewlett Packard in 2015, said non-GAAP earnings for the three months ending in April, its fiscal second quarter, were pegged at 44 cents per share, missing Street estimates by a penny, as revenues rose 0.2% to $6.7 billion.
China's Covid lockdowns, as well as the seizing of support of Russia-based services contracts clipped around $250 million from second quarter sales, HPE said.
The group reiterated its view that full-year sales would grow between 3% and 4% this year, with earnings largely in-line with Street forecasts, while noting what it called a "more challenging supply environment that limited upside." for software-as-a-services sales. Non-GAAP earnings for the current quarter were forecast between 44 cents and 54 cents per share, compared to a Refinitiv consensus of 52 cents.
"We have momentum across the portfolio with our as-a-service model differentiating us. This quarter, though, through a combination of supply constraints, limiting our ability to fulfill orders as well as some areas where we could have executed better, we did not fully translate the strong customer orders into higher revenue growth," CEO Antonio Neri told investors on a conference call late Wednesday. "I am confident that we have identified where we can strengthen and expect continued improvement as we move into the back half of the year."
"From a top line perspective, we are very pleased with the continued strength in orders and growing backlog that gives us confidence in future revenue growth in fiscal year 2022 and beyond," added CFO Tarek Robbiati. "We do want to remain prudent in the short term, given the ongoing supply challenges that we believe will likely last well into next year."
Hewlett Packard Enterprise shares were marked 6.2% lower in premarket trading to indicate an opening bell price of $14.80 each, a move that would extend the stock's year-to-date decline to around 6.2%.
