HPE Falls After Outlook Disappoints on Slower Server Deals

Core Insights - Hewlett Packard Enterprise Co. (HPE) shares fell in premarket trading after the company provided a sales outlook that did not meet high expectations for its AI server business, projecting revenue between $9 billion and $9.4 billion and profit of 57 to 61 cents for the quarter ending in January, while analysts had expected $9.88 billion in sales and 53 cents in profit [1][2] Group 1: Sales and Profit Outlook - HPE's revenue for the fiscal fourth quarter ending October 31 was $9.68 billion, which was a 14% increase year-over-year but still below the average analyst estimate of $9.9 billion [6] - The company reported a profit of 62 cents per share, exceeding the average analyst estimate of 58 cents [6] - Delays in server deals for AI workloads, including a significant transaction in Europe and agreements with the US government, contributed to the shortfall in sales expectations [2][4] Group 2: Market Reaction and Investor Sentiment - Following the sales outlook announcement, HPE shares dropped as much as 9.3% in premarket trading after closing at $22.90, despite having gained 6.7% year-to-date prior to the announcement [3] Group 3: Future Demand and Strategic Focus - HPE continues to experience substantial interest in its AI servers, particularly from government and business customers, although demand is expected to remain uneven due to extended lead times for orders from large sovereign customers [4] - The company is focusing on networking as a key area for future growth, highlighted by its recent acquisition of Juniper Networks Inc. for approximately $13 billion, which has improved profit margins through cost-cutting and increased sales of networking equipment [5]