Summary
Hewlett Packard Enterprise (HPE) reported a net loss of $27 million, or ($0.02) per diluted share, for the third quarter of fiscal year 2019, a significant decrease from the $451 million net profit, or $0.29 per diluted share, in the same period last year. This decline was primarily driven by substantial "acquisition, disposition and other related charges," notably a one-time charge of $563 million related to an arbitration settlement, alongside ongoing "transformation costs" associated with the HPE Next initiative. Despite the net loss, the company's gross margin improved by 3.4 percentage points to 33.9%, reflecting successful cost management, lower commodity costs, and a shift towards higher-margin products, particularly within the Hybrid IT segment. Total net revenue for the quarter decreased by 7.0% year-over-year to $7.2 billion, impacted by strategic decisions to reduce revenue from less profitable areas, market weakness, and execution challenges. Both the Hybrid IT and Intelligent Edge segments experienced revenue declines, though the Financial Services segment saw a slight improvement in operating margin. The company continues to focus on its strategic transformation, aiming to invest in high-growth, higher-margin solutions and services. Looking ahead, HPE aims to navigate these challenges by continuing its operational efficiency improvements and strategic realignment.
Financial Highlights
50 data points| Revenue | $7.22B |
| Cost of Revenue | $4.77B |
| Gross Profit | $2.45B |
| R&D Expenses | $481.00M |
| SG&A Expenses | $1.25B |
| Operating Expenses | $7.29B |
| Operating Income | -$76.00M |
| Net Income | -$27.00M |
| EPS (Basic) | $-0.02 |
| EPS (Diluted) | $-0.02 |
| Shares Outstanding (Basic) | 1.33B |
| Shares Outstanding (Diluted) | 1.33B |
Key Highlights
- 1Reported a net loss of $27 million for Q3 FY19, a significant decline from $451 million net profit in Q3 FY18, primarily due to a $563 million charge for an arbitration settlement.
- 2Total net revenue decreased by 7.0% to $7.2 billion, reflecting strategic exits from less profitable areas and market challenges.
- 3Gross margin improved by 3.4 percentage points to 33.9%, driven by cost efficiencies and a favorable product mix, especially in Hybrid IT.
- 4Hybrid IT segment revenue decreased by 9.2%, impacted by lower server sales and market weakness, but its operating margin improved due to cost controls.
- 5Intelligent Edge segment revenue declined by 2.9%, affected by sales execution issues and unfavorable currency.
- 6Company repurchased $575 million of its common stock during the quarter, with $2.7 billion remaining authorization for future repurchases.
- 7HPE completed the termination of its prior credit facility and entered into a new $4.75 billion senior, unsecured revolving credit facility, highlighting ongoing financial management.