"Why Hewlett Packard Enterprise Company (HPE) Went Down on Friday"

Hewlett Packard Enterprise Company (HPE) experienced a notable decline in its stock price on Friday, March 7, 2025. This drop can be attributed to a combination of factors, including the company's recent financial performance, market expectations, and broader industry trends. Let's delve into the specifics to understand why HPE's stock took a hit.

Firstly, HPE reported its first-quarter fiscal 2025 financial results on March 6, 2025. The company achieved its fourth consecutive quarter of year-over-year revenue growth, with revenue increasing by 16% to $7.9 billion. This growth is impressive and indicates that HPE is successfully expanding its market share. However, the company's gross margins decreased by 720 basis points from the prior-year period to 29.2% on a GAAP basis and by 680 basis points to 29.4% on a non-GAAP basis. This decline in gross margins suggests that HPE is facing increased costs or pricing pressures, which could be a concern for investors.

Secondly, HPE's diluted net earnings per share (EPS) increased by 52% to $0.44 on a GAAP basis and by 2% to $0.49 on a non-GAAP basis. While this increase in EPS is positive, it is important to note that the company's cash flow from operations decreased by $454 million to $(390) million, and its free cash flow decreased by $395 million to $(877) million. This decline in cash flow could be a concern for investors, as it suggests that the company is facing liquidity challenges or is investing heavily in growth initiatives.

Thirdly, HPE's segment performance was mixed. The company's server revenue increased by 29% to $4.3 billion, while its intelligent edge revenue decreased by 5% to $1.1 billion. The hybrid cloud revenue increased by 10% to $1.4 billion, and the financial services revenue was flat at $873 million. This mixed segment performance could be a concern for investors, as it suggests that the company is facing challenges in some of its key business segments.

Fourthly, HPE's guidance for the second quarter of fiscal 2025 estimates revenue to be in the range of $7.2 billion to $7.6 billion, and non-GAAP diluted net EPS to be in the range of $0.28 to $0.34. If the company's actual performance falls short of these expectations, it could lead to a decline in the stock price.



In summary, while HPE's revenue growth and EPS are positive indicators, the decline in gross margins, cash flow, and mixed segment performance could be concerns for investors. Additionally, if the company's actual performance falls short of market expectations, it could lead to a decline in the stock price. Investors should closely monitor HPE's financial performance and market trends to make informed investment decisions.