Despite the setback, CEO Antonio Neri is optimistic that the tech company will revert to growing its revenue this year and put the blame for the quarterly sales shortfall on “longer sales cycles”, especially for bigger deals, as well as the wider impact of trade tariffs.
“I am confident on our ability to drive sustainable, profitable growth as we continue to shift our portfolio to higher-value, software-defined solutions and execute our pivot to offering everything as a service by 2022,” Neri said in a statement.
Investors were unimpressed, sending Hewlett Packard Enterprise shares down 8% to $16.04 in late-morning trade Tuesday.
The California company’s revenue dropped to $7.22 billion, missing Wall Street’s projection of $7.4 billion. Sales from its critical Hybrid IT segment, also missed the consensus estimate, falling 11% to $5.67 billion against Wall Street’s expectation of $5.74 billion.
But HPE’s profits in the quarter looked better. Its earnings came in at $480 million, or $0.49 on an adjusted basis, which handily beat the $0.46 analysts had called for, and also rebounded from a loss of $757 million in the year-ago quarter when the company was hit by tax-related expenses.
Looking to fiscal 2020, the outlook for HPE, the end product of the break-up of Hewlett-Packard Co in 2015, calls for per-share earnings of $1.78 to $1.94, which is in line with analysts’ average forecast of $1.85.