Hewlett Packard Enterprise (HPE) fell by 12% to $15.81 on Friday, the largest single-day decline since March 2020, amid concerns over profit margins and tariffs.
The company’s earnings forecast for the fiscal year ending October 2025 has been revised downwards, with analysts expecting a profit of $1.70 to $1.90 per share, compared to an average estimate of $2.12 a share.
HPE’s server unit is struggling due to weak margins, primarily caused by higher-than-realized costs and the need for expensive AI chips. The company plans to cut around 3,000 jobs, with 2,500 roles coming through job cuts and the rest through attrition.
HPE’s Artificial Intelligence (AI) systems revenue has seen a significant decline, dropping to $900 million in the fiscal first quarter, down from $1.5 billion in the previous quarter. The company reported total quarterly sales increased by 16% to $7.85 billion, but server revenue fell short of estimates.
The company is working to address these issues, including reducing costs and improving execution performance. However, analysts are expressing concerns that problems may go beyond tariffs and weak margins on AI systems.
Source: https://finance.yahoo.com/news/hpe-gives-weak-profit-outlook-210634036.html