By Juby Babu (Reuters) -Hewlett Packard Enterprise forecast quarterly revenue growth below estimates, which triggered a near 20% drop in its shares in after hours trading, and said the U.S.’ tariff war had created uncertainty that affected its server business. HPE expects to adjust prices of its products and leverage its global supply chain to […]
Science
HPE expects tariffs to bite, forecasts quarterly revenue below estimates
Audio By Carbonatix
By Juby Babu
(Reuters) -Hewlett Packard Enterprise forecast quarterly revenue growth below estimates, which triggered a near 20% drop in its shares in after hours trading, and said the U.S.’ tariff war had created uncertainty that affected its server business.
HPE expects to adjust prices of its products and leverage its global supply chain to mitigate any impact from imposed and threatened tariffs, CEO Antonio Neri said on a post-earnings call with analysts on Thursday.
Neri said HPE’s “forecast reflects its best estimate of the net impact from U.S. tariff policy.”
U.S. President Donald Trump on Thursday exempted some goods from both Canada and Mexico under a North American trade pact until April 2, from the 25% tariffs that he had imposed earlier this week. His additional 10% duty on Chinese goods – on top of the 10% tariff he levied on February 4 – took effect on Tuesday.
Sales outside the U.S. made up nearly 64% of HPE’s net revenue in fiscal 2024. The production and final assembly of its products and other critical operations are in Mexico and China, among other geographies.
“Through these efforts, we expect to mitigate to a significant degree, the impact on the second half of the year, and to a lesser extent, the impact on the second quarter as it takes time to implement mitigations,” CFO Marie Myers said.
HPE projected revenue between $7.2 billion and $7.6 billion for the second quarter, while analysts expected $7.93 billion, according to data compiled by LSEG. Its profit forecast also fell short of expectations.
The server maker also said it would lay off 5% of its global workforce, or roughly 2,500 positions, as part of a cost-saving program to deliver gross savings of about $350 million by fiscal 2027. It had nearly 61,000 employees as of October 31.
For the first quarter ended January 31, HPE posted revenue of $7.85 billion, compared with analysts’ average estimate of $7.82 billion. Its server revenue grew 29% to $4.3 billion.
(Reporting by Juby Babu in Mexico City; Editing by Mohammed Safi Shamsi and Rashmi Aich)