Hewlett Packard Enterprise Cuts Free Cash Flow Projection, Posts Lower Revenue

By Maria Armental 

Hewlett Packard Enterprise Co. cut its free-cash flow projections for the year, citing a supply-chain disruption that was aggravated by the coronavirus epidemic, and said it no longer expects revenue to increase this year.

HPE had previously projected a return to revenue growth this year. But that was before the coronavirus, which has disrupted business around the world. HPE sells servers, data-storage gear and related services to corporate clients.

On Tuesday, HPE said it no longer expected revenue to grow for the year that ends in October, as a shortage of components was exacerbated by the coronavirus outbreak and it faced some challenges in consolidating a manufacturing site in North America.

But company officials said they expect the issues to be resolved toward the end of the year and maintained profit targets for the year at $1.01 to $1.17 a share in profit, or $1.78 to $1.94 on an adjusted basis.

The company said it now expects $1.6 billion to $1.8 billion in free cash flow for the year, down from its earlier view of $1.9 billion to $2.1 billion.

Revenue for the quarter ended Jan. 31 fell to $6.95 billion from $7.55 billion a year earlier, a larger-than-expected decline.

HPE's shares fell 5.8% to $11.86 in after-hours trading on Tuesday.

The Silicon Valley company, born from the 2015 split of Hewlett-Packard Co., reported a first-quarter profit of $333 million, or 25 cents a share, compared with $177 million, or 13 cents a share, a year earlier. On an adjusted basis, HPE's profit rose to 44 cents a share from 42 cents a share a year earlier.

HPE forecast 20 cents to 24 cents a share, or 42 cents to 46 cents a share on an adjusted basis. Analysts surveyed by FactSet expected 24 cents a share, or 44 cents a share as adjusted, on $7.21 billion in revenue.

HPE has canceled most of its events through April over coronavirus concerns but still plans to hold the HPE Discover 2020 conference in Las Vegas in June, it said.

Write to Maria Armental at [e-mail]

(END) Dow Jones Newswires

March 03, 2020 18:31 ET (23:31 GMT)

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