Hewlett Packard Enterprise (HPE) has posted solid first quarter results, but at the same time confirmed that it will axe 5 percent of its workforce.
HPE recorded a healthy Q1 rise in both profits and revenues, but its outlook for the 2025 disappointed investors and its share price fell 19 percent on Thursday, and on Friday is currently trading down nearly 5 percent at $17.96.
It comers after Trump’s US Justice Department in late January sued to block HPE proposed $14 billion acquisition of Juniper, citing the elimination of competition in wireless networking.
Q1 financials
But financially speaking, HPE seems to be doing just time.
For the first quarter ending 31 January HPE posted a net profit of $598m, compared to $387m in the same year-ago quarter.
Revenues meanwhile rose 16 percent to $7.8bn from $6.7bn a year earlier.
“HPE achieved our fourth consecutive quarter of year-over-year revenue growth, increasing revenue by double digits in Q1,” said Antonio Neri, president and CEO of Hewlett Packard Enterprise.
“I am particularly proud of the exciting innovation we introduced in the quarter, which was met with customer enthusiasm,” said Neri. “HPE has a proven track record of consistent, disciplined execution, but we could have executed better in some areas in the quarter. I am confident in our ability to keep winning in the market, which will, in turn, drive shareholder returns.”
But Neri had a somewhat different message later on a conference call with analysts.
“We could have executed better,” Neri reportedly said on the conference call.
This was due to the fact that HPE had higher than normal inventory for artificial intelligence servers because of a shift to next-generation Blackwell graphics processing units from Nvidia.
Total server revenue was up 29 percent at $4.29 billion. Hybrid Cloud revenue was up 10 percent at $1.4 billion; Intelligent Edge revenue was down 5 percent at $1.1 billion; and Financial Services revenue was flat at $873 million.
Looking forward HPE estimated fiscal 2025 revenue growth of 7 to 11 percent, and fiscal 2025 operating profit growth to be in the range of negative 24 to negative 9 percent, which was weaker than the markets had expected.
Cost cutting
And despite the mostly positive financial results, and it being willing to spend up to $14 billion to acquire Juniper, HPE also confirmed it will be axing 5 percent of its workforce over the next 18 months.
At the end of October 2024, HPE employed 61,000 people, according to its most recent annual report.
But now around 2,500 employees are expected to lose their jobs, when including expected attrition.