Hewlett Packard Enterprise Co. provided a revenue outlook in the current quarter that was just shy of expectations, after reporting a steeper decline in server sales than analysts expected.
Revenue will be $6.9 billion to $7.3 billion in the period ending in January, HPE said Tuesday in a statement. At the midpoint, that would miss analysts’ average estimate of $7.27 billion, according to data compiled by Bloomberg. Profit, excluding some items, will be about 46 cents, in line with the average projection.
Investors have been concerned about the strength of corporate purchasing of office technology, particularly servers and storage. In an interview, Chief Executive Officer Antonio Neri said that customer demand for these products has stabilized and is improving. Neri said HPE’s server business will be helped by the interest in artificial intelligence, adding that the company booked $2.4 billion related to AI during the fiscal year ending in October.
The company also affirmed its earlier full-year guidance of 2% to 4% revenue growth in constant currency. That growth will be weighted toward the second half of the year as more chips, such as those used by high-powered server for AI, become available, said Senior Vice President Jeremy Cox during a conference call after the results were released.
“HPE is counting on a better second half and AI to execute on its full-year goals,” said Woo Jin Ho of Bloomberg Intelligence. “The AI strength masks a somewhat lackluster core result.”
In the quarter ended Oct. 31, sales slipped 6.6% to $7.35 billion, in line with expectations. The Compute division, which contains HPE’s traditional server business, dropped 31% to $2.6 billion, a steeper fall than analysts projected. Profit, excluding some items, was 52 cents a share, compared with analysts’ average estimate of 50 cents.
The shares were little changed in extended trading after closing at $15.52 in New York. The stock has declined 2.8% this year.
HPE also said it was raising its dividend 1 cent to 13 cents a share, payable on Jan. 11 to shareholders as of Dec. 13.
(Updates with comments from analyst in the fifth paragraph.)