HPE Shares Fall Sharply Under Weight of Q2 Miss

Hewlett Packard Enterprise shares tanked after missing second quarter top- and bottom-line estimates.
Author:
Publish date:

Shares of server storage company Hewlett Packard Enterprise  (HPE) - Get Report fell more than 11% Friday as investors digested the company's disappointing fiscal second quarter financial results.

HPE CEO Antonio Neri opened the company's release by blaming the company's quarterly financial performance on "the global economic lockdown."

The San Jose-based company reported fiscal second quarter revenue of $6 billion, a 16% decline from a year ago, a decline that was primarily driven by "supply chain constraints and delays in customer acceptance."

HPE also reported second quarter earnings of 22 cents per share compared to 42 cents per share a year ago. 

Analysts were expecting the company to report revenue of $6.32 billion on earnings of 30 cents per share. 

HPE announced that it is reducing Neri's base salary by 25% starting July 1 due to "the impact and uncertainty caused by the COVID-19 pandemic." Every executive officer at the vice president level will also see their base salary reduced by 25%.

The company's board of directors and other executives also saw their salaries reduced by varying levels. 

Neri was bullish on the growth in the company's cloud, edges and its data center as a service product known as HPE GreenLake. 

The company's compute segment, which accounts for nearly half of the company's revenue, saw revenue drop 19% with an operating profit of 4.7% compared to 9.3% a year ago. 

HPE's storage unit, its second highest revenue-generating segment, saw revenue fall 16% year over year with its operating profit falling to 13.4% from 18.5% a year ago.