HPE Says It’s Weathering Profit Squeeze at Start of New AI Era
(Bloomberg) -Hewlett Packard Enterprise Co. Chairman of the Executive Board Antonio Neri, the company’s artificial intelligence -oriented demand entering a new period of the weakening of profit margins, he said.
Although the operating margin in HPE’s server unit narrowed to 6.4% in the last quarter, compared to 10.8% compared to the previous year, the figure predicted that the figure would return to approximately 10% at the end of the current period.
Neri also explained the potential of HPE’s recently completed Juniper Networks acquisition, which has tone the company to the network industry. When the statements presented the third quarter earning report, the HPE helped to calm the concerns of investors who sent shares higher after the first slide.
In a conference meeting with analysts, Neri said, ım I am excited about the next part of HPE, ”he said. “The completion of our acquisition of Juniper Plasts on the network as the market enters a business transformation in which the market enters a new CT period and the formation of AI, clouds and networks.”
HPE shares increased by 1.5% in late process. In New York this year increased by 6.9% to $ 22.82.
In the third quarter, even if some margins narrowed, HPE’s sales and profit estimates exceeded. The income increased by 18% to 9.14 billion dollars in the period ending on July 31. The profit was 44 cents per share, except some products. Analysts predicted $ 8.65 billion sales and 43 cents earnings.
The company said that the profit would be 56 cents to 60 cents in October quarter, except for some items. Analysts foresee 59 cents. HPE foresees sales of $ 9.7 billion to $ 10.1 billion compared to an estimation at the upper end of this range.
Last week, HPE rival Dell Technologies Inc., presented an overwhelming report every three months. This company said that the profit margins on AI servers were lower than Wall Street expected.
HPE and DELL benefit from the request for server computers that can help to handle a flood of AI software and services. However, expensive chips and others from Nvidia Corp. made equipment less profitable.
Plus on the side, the effect of trade turbulence decreased, he said. Tariffs are expected to affect 4 cents per share this year from the previous 7 cents expectation, this year.
HPE has closed the purchase of the last quarter juniper and expects at least $ 600 million cost savings that combine operations in the next three years.
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