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HPE and Dell both report slowing revenues

HPE and Dell both report slowing revenues

Hewlett Packard Enterprise and Dell have posted a mixed set of results, although both have reported slowing sales.

HPE reported that first quarter sales, ended 31 January, 2024, were down 14% compared to the same period last year, reaching $6.8 billion.

The annualised revenue run rate however, was $1.4 billion, up 42% from the prior-year period.

The operating profit for the quarter fell, as did the pre-tax profit. And the net profit slumped from $501m to $387m.

"HPE exceeded our profitability expectations and drove near-record year-over-year growth in our recurring revenue in the face of market headwinds, demonstrating the relevance of our strategy,” maintained Antonio Neri, president and CEO of Hewlett Packard Enterprise.

“Despite a mixed quarter, I remain very confident that our focus on customer-centric innovation and our track record of operational discipline will allow us to capitalise on the significant market opportunities in AI, as well as across edge and hybrid cloud and to deliver value to our shareholders.”

One drag on the HPE results was the Server revenue segment, which generated $3.4 billion in sales, down 23% from the prior-year period. The Server business segment combines the previously separately reported Compute and HPC & AI business segments, with adjustments for certain product lines that are now reported in the Hybrid Cloud segment.

Intelligent Edge sales were $1.2 billion, up 3%. Hybrid Cloud revenue was $1.2 billion, down 10%. Financial Services revenue was $873 million, and flat.

At rival Dell Technologies, both fourth quarter and full year results were announced for the period ending 2 February, 2024.

Fourth quarter revenue was $22.3 billion, down 11% year-over-year.

Operating income was $1.5 billion, up 25%.

Revenue for the full year was $88.4 billion, down 14% from fiscal year 2023. Operating income was $5.2 billion - down 10%.

Yvonne McGill, chief financial officer, Dell Technologies, said: “We’re optimistic about FY25 and are increasing our annual dividend by 20% – a testament to our confidence in the business and ability to generate strong cash flow.”

Dell’s Infrastructure Solutions Group delivered fourth quarter revenue of $9.3 billion, down 6% year-over-year. Full-year sales dropped 12% to $33.9 billion, and the full-year operating income was $4.3 billion, down 15%.

The Client Solutions Group delivered fourth quarter revenue of $11.7 billion, down 12%. Commercial client revenue was $9.6 billion, and Consumer revenue was $2.2 billion. Full-year revenue was $48.9 billion, down 16%.

Like most big technology players these days, both these companies are pinning their hopes on newer services built around AI, to serve cloud to edge markets.

The next 12 to 18 months will indicate whether they are being successful in properly replacing legacy compute and storage revenues.