HPE slashes forecast, sees 'significant headwinds'

SAN FRANCISCO — Hewlett Packard Enterprise shares dropped sharply Thursday after it reported a drop in revenue and trimmed its earnings forecast for the fiscal year.

The Silicon Valley tech behemoth blamed a trio of "significant headwinds" — "increased pressure from foreign exchange movements, higher commodities pricing and some near-term execution issues."

Market challenges could last three to four quarters based on HPE's financial performance, those of its rivals and the supply chain, CEO Meg Whitman said in a phone interview with USA TODAY. She expressed confidence in the company's server and cloud businesses.

The darkened horizon prompted HPE to slash its forecast for full-year earnings on a GAAP basis to 60 cents to 70 cents per share — compared with 72 cents to 82 cents previously.

HPE reported adjusted earnings of 45 cents per share on revenue of $11.4 billion for its fiscal first quarter ended Jan. 31 after markets closed Thursday. The news sent company shares down 7% to $23 in extended trading. They were off 2% early Friday.

While HPE's earnings were slightly above the 44 cents per share expected by analysts polled by S&P Global Market Intelligence, sales fell far short of Wall Street analysts' revenue forecast $12.07 billion.

In the same quarter a year ago, HPE reported earnings of 41 cents per share on revenue of $12.72 billion.

Independent analyst Jack Gold called it a "terrible" quarter in which every business was down — some by double digits — and across all geographies.

"It may take several quarters before they right the ship," Gold said. "And there will be great pressure on Whitman.".

Follow USA TODAY San Francisco Bureau Chief Jon Swartz @jswartz on Twitter.