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Hewlett Packard Enterprise Outperforms Expectations but Forecasts Weaker Q1

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Mahnoor Jehangir
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Hewlett Packard Enterprise Outperforms Expectations but Forecasts Weaker Q1

In a surprising turn of events, Hewlett Packard Enterprise (HPE) outperformed analysts' predictions, posting an adjusted profit of 52 cents per share. This figure surpasses the average estimate of 50 cents for the quarter ending October 31, 2023. Unfortunately, the company's robust earnings are shadowed by a weaker forecast for the first quarter of fiscal 2024, attributed to tough macroeconomic conditions, such as persistent inflation and soaring interest rates, causing businesses to slash IT expenditure.

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Looking Ahead

HPE predicts a revenue between $6.90 billion and $7.30 billion for the first quarter, with the midpoint falling marginally short of the $7.28 billion estimate. The adjusted net earnings per share are projected to range from 42 to 50 cents, with the midpoint slightly under the consensus estimate of 47 cents.

Performance Review

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During the fourth quarter, HPE's net revenue witnessed a 7% dip to $7.35 billion, slightly missing the $7.36 billion estimate. The Compute segment, HPE's largest, experienced a nearly 31% plunge in revenue compared to the previous year. In contrast, the annualized revenue run rate, a key indicator of future revenue, escalated by 3.9% to $1.30 billion as of October 31.

Wider Industry Implications

In other industry news, Apple terminated its credit card collaboration with Goldman Sachs, and Unity Software has announced job cuts. Alipay plans to offload its stake in Zomato, while Amazon unveiled a new AI chip and services to entice corporate clients. Atos is contemplating further asset sales and renegotiating a previous transaction to address its capital and debt needs.

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