After its profits were overshadowed by reports of layoffs and fears that tariffs will have a negative impact moving forward, Hewlett Packard Enterprise’s shares were down almost 14% in after-hours trade Thursday.
Over the next 12 to 18 months, the server and software company plans to start a cost-cutting campaign that will result in 2,500 job cutbacks, or a 5% reduction in its entire staff. Both its fiscal second quarter and full-year 2025 earnings would be charged as a result, which detracted the company’s guidance from what Wall Street had anticipated.
Additionally, because many of its goods are made outside of the United States, HPE (HPE) is factoring in the expected impact of the global tariffs imposed by the Trump administration.
“Server execution issues and tariffs,” explained Marie Myers, Chief Financial Officer at HPE, in reference to the company’s lower-than-expected projection. Due to product transitions to the new Blackwell platform from Nvidia Corp. (NVDA), the company had price challenges in its traditional server business and higher-than-expected inventory in its AI-server division.
HPE anticipates revenue between $7.2 billion and $7.6 billion for the fiscal second quarter, GAAP earnings per share between 8 and 14 cents, and a restructuring charge of roughly 20 cents per share. HPE anticipates earnings between 28 and 34 cents on an adjusted basis.
As per FactSet, analysts had anticipated a consensus of $7.9 billion in second-quarter revenue, 44 cents per share in GAAP earnings, and 50 cents in adjusted earnings.
“It’s a pretty fluid environment right now, information is changing at a fairly rapid rate,” Myers stated. “We included impact of tariffs as they stand in our guide.” “There will be some declines in volume as customers may decide to postpone purchases,” she added, adding that HPE is also anticipating some degree of pricing rises due to expected tariffs.
HPE announced fiscal first-quarter sales of $7.9 billion on Thursday, which was marginally higher than Wall Street’s $7.8 billion forecast and up 16% from the same period last year ($6.7 billion).
According to HPE, it increased its business AI orders by 40% annually and inked $1.6 billion in net orders for AI systems.
GAAP earnings per share increased from 29 cents to 44 cents, which was exactly in line with Wall Street projections. HPE reported 49 cents per share on an adjusted basis, up from 48 cents the previous year. According to FactSet, the Wall Street estimate was 50 cents per share.
HPE projects sales growth of 7% to 11% and GAAP earnings per share of $1.15 to $1.35 for the entire year. With cost-cutting and other measures excluded, adjusted earnings are expected to be between $1.70 and $1.90, excluding an after-tax charge of roughly 55 cents per share.
Additionally, HPE announced that the U.S. District Court of Northern California in San Francisco would hold a trial on July 9 in its action against the Justice Department, which is contesting its proposed $14 billion acquisition of Juniper Networks (JNPR).
