Hewlett Packard Enterprise Co(NYSE: HPE) stock crashed over 8.4% today (as of 12:02PM EST; Source: Google finance) hurt by their weaker than expected outcome.
The group’s gross margin fell 210 basis points to 29.7% on a year-over-year basis, but improved 40 basis points against the earlier quarter. Non-GAAP operating profit fell 100 basis points year-over-year to 8.2% while improved 130 basis points against earlier quarter. Operating margins fell 270 basis points on a year-over-year basis but enhanced 130 basis points sequentially to 10.6%. Server revenue fell 5% on a yoy basis, but rose 6% excluding Tier 1 as the group implemented their plans to exit the custom commoditized server market. The group implemented their core RAC and tower server business which drove 7% growth driven by attached configurations through higher AUPs.
On the other hand, the enterprise group revenue enhanced 1% yoy and rose 7% without Tier 1 server sales. The core RAC and tower servers business showed a strong momentum across major growth areas like Aruba wireless, campus switching, all-flash storage and Point Next.
The group continues to enhance their IT spend environment. However, they continue to face competitive pricing and commodities fluctuations. The group’s performance in the Americas is steady as core compute stabilized and networking growth improved but was offset by softer organic storage results. The Revenue in Europe was also driven by networking and continue to grow with mid-single-digit growth in Germany, France and Iberia. Asia-Pacific delivered strong core server sales, with growth in Japan, Australia, India and China.
For fiscal year ’18, they forecast a non-GAAP diluted net earnings per share in the range of $1.15 to $1.25. The group forecasts a normalized free cash flow of $2 billion and as reported free cash flow of $1 billion. They remain committed to returning $2.5 billion of capital to shareholders in the form of $2 billion share buybacks and $500 million of dividends, which is a rise of 15% from $6.5 cents to $7.5 cents per share each quarter. Management enhanced their share repurchase authorization by $5 billion.