HPE raises some hardware prices and magically reports ‘record’ third quarter gross profit • The Register

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Hewlett Packard said it posted record gross margins for its last fiscal quarter after raising prices for hardware, including servers and networking kits, in response to component shortages across the industry.

The company last night reported sales of $ 6.897 billion for its third quarter ended July 31 from $ 6.816 billion a year ago, an increase of 1%. This was still down from the $ 7.217 billion HPE achieved in the same quarter before the 2019 pandemic.

The largest division remained Compute, which posted revenue of $ 3.104 billion, down 9% year-over-year. CFO Tarek Robbiati said this reflected normal seasonality “despite the previously anticipated narrow supply chain”.

Intelligent Edge, the strategically important unit of HPE, sold network equipment for $ 867 million, up 23%, which, along with HPC and Mission Critical Services (itself up 9% to 741 million dollars) was one of two areas that actually grew beyond HPE’s FY2019 third quarter reported sales.

“Switching has grown over 20% year over year as wireless LAN has experienced more acute supply constraints and has grown from mid to single digits,” said the director financial.

“In this context where you have a constrained supply environment, we have to be very careful about price management. And we have taken measures that result in this record level of gross margin of 34.7%, ”he added. A year ago, HPE’s gross margin was 30.5%.

Many networking companies have lamented the conundrum of the components this year, with Arista CEO, for example, Jayshree Ullal, claiming that she has never witnessed a situation like this in her career. , caused by massive demand for silicon. Cisco estimates that the shortages are there until next year.

Robbiati added:

“AUP (Average Unit Price) reached mid to high single-digit quarter-over-quarter, reflecting the pass-through of commodity costs and richer setups. As always, richer setups play a big role in AUP, but also pricing in this case. And units were stable quarter over quarter, given some expected supply chain constraints. We are therefore rather satisfied with the IT performance.

“In the environment in which we operate, demand is very solid and with supply constraints. We don’t see them ending until the first half of calendar year ’22. So we just have to navigate this situation because the capacity of all of our manufacturing partners has not returned to pre-pandemic levels, and it will take another 2 to 3 quarters, ”the CFO said.

HPE’s storage business grew 1% to $ 1.176 billion, but down from the same quarter two years ago, when revenue was $ 1.255 billion. Financial services were flat at $ 844 million and the rest of the group’s revenue was made up of business investments.

HPE Greenlake’s annualized execution rate increased by a third to $ 705 million. HPE intends to sell its entire kit as a service starting next year.

Total costs and expenses fell to $ 6.615 billion from $ 6.8 billion, mainly through a reduction in the cost of products manufactured. This partially offset by the increase in sales, general and administrative. Operating profit was $ 282 million from $ 12 million a year ago.

Raised by the tax indemnity and related adjustments and profit from holdings, net profit was $ 393 million from $ 9 million a year ago. This compares favorably with the loss of $ 134 million recorded by HPE in the third quarter of 2019. ®


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