Stock bounces from post-earnings dip

Hewlett Packard Enterprise It reported weak revenue and server numbers in the fourth quarter but beat earnings expectations and reaffirmed fiscal year guidance on strong AI demand.

“I’m incredibly pleased with the results we published in Q4… even though we were on the lower end of the guidance on revenues, because that was driven by the conversion of some unique deals in AI, two of which were driven by the shutdown in the U.S. and the other in Europe, driven by data center readiness,” CEO Antonio Neri told CNBC’s “Money Movers” on Friday. he said.

The company reported earning After the bell on Thursday, it reported revenue of $9.68 billion, up 14% from a year earlier but falling short of the $9.94 billion in revenue that analysts polled by LSEG expected.

Loss of revenue and weakness in the company’s server segment initially caused shares to fall as much as 9%. Shares rebounded on Friday and closed up 1.88%.

HPE beats earnings expectations for Q4; Adjusted earnings of 62 cents per share came in above the 58 cents per share that LSEG had expected.

The adjustments “came from amortization of intangible assets, Juniper-related acquisition costs, stock-based compensation expense and cost reduction plan expense, partially offset by tax adjustments and other adjustments,” CFO Marie Myers said on the earnings call with analysts.

The company reaffirmed its fiscal 2026 revenue outlook in the 17% to 22% range but issued a weak forecast for the first quarter.

The company said it expects fiscal 2026 first-quarter revenue to be in the range of $9 billion to $9.4 billion, which is below the $9.87 billion FactSet analysts expected.

Rising costs, seasonality and timing of AI server deals were factors in the guidance.

The Q4 revenue decline was “consistent with historical seasonality,” Myers told analysts. He also noted continued cost increases in DRAM, dynamic random access memory and NAND memory, a flash memory often used in memory cards.

The majority of those costs are expected to be passed on, he told analysts.

AI system orders reached $1.9 billion in the fourth quarter, and Myers said the company expects AI demand to be “uneven,” with larger dominant customers placing orders with extended lead times that could delay deliveries into future quarters.

Neri said on the analyst call that the company expects the bulk of its AI revenue transformation to occur in the back half of fiscal 2026.

Revenue for HPE’s server segment in the fourth quarter was $4.46 billion, down 5% from $4.68 billion a year ago. The fourth-quarter figure missed StreetAccount analysts’ expectations of $4.58 billion.

Myers addressed the absence in the earnings release by attributing it to the timing of AI service shipments and lower-than-expected government spending.

“Despite these headwinds, we are encouraged by strong server order growth across both traditional server and AI offerings, with demand significantly outpacing revenue during this period,” he said.

Server revenue decreased 10% from the third quarter.

Network revenue of $2.81 billion in Q4 was a bright spot, boosted by completed acquisitions. Juniper Nets in July.

The acquisition makes HPE a “network-centric company,” Neri told CNBC on Friday.

HPE reported fourth-quarter net income of $146 million, or 11 cents per share; That’s much lower than net income of $1.34 billion, or 99 cents per share, a year ago.