Hewlett Packard Enterprise Company (NYSE:HPE) Q1 2023 Earnings Call Transcript

Tarek Robbiati: Yes. So thank you, Amit, for the question on H3C. We exercised the put, as you recall, towards the end of the calendar year of 2022. And we are right now in the process of agreeing the value of our stake with our partners of Unigroup. And this process is going to take a few month and it’s going to — we expect it to complete towards the end of calendar year 2023, and we feel reasonably good about the prospects. For the meantime, we continue to consolidate H3C and benefit from the dividends that we received from the company. And we are not deconsolidating H3C at this stage. It’s most likely going to be the case of the end of fiscal year 2023 when that will happen. And at that point, we will advise both on the impact of dilution from deconsolidation and also the use of proceeds once we receive them.

I would like to also emphasize that we continue to have commercial agreements with H3C, notwithstanding, the exercise of the put, those commercial agreements are distinct from the exercise of the put, and we will continue to generate value through those commercial agreements that we have with H3C.

Antonio Neri: Yeah. And as always, I mean, listen, we’re going to apply the same discipline for returning capital to shareholders and continue to invest in the business at the appropriate time. But until we finish this process, right, it’s just emphasizing. We have to go through the process and complete the agreement.

Jeff Kvaal: Amit, thank you. Next question please.

Operator: Our next question will come from Sidney Ho with Deutsche Bank. You may now go ahead.

Sidney Ho: Great. Thanks for taking my question, and congrats on the strong results. So I also have a question on the full year guide being up 3% to 6% — I think it’s 5% to 7%. And, obviously, impressive compared to our peer, who just downtake earlier today. But if I look at the midpoint, take a midpoint of your fiscal second quarter guidance, it would assume the second half of the year will be down slightly from the first half, which is kind of unseasonal, right? It’s normal seasonality is up, call it, 5%. Can you talk about what’s embedded in your second half revenue guidance? Is that all driven by your view on the macro side, any one-time item that we should be thinking about in the first half? And maybe how we should think about the backlog helping — delivering from your backlog offset some of the demand weakness from half-over-half basis at the standpoint? Thanks.

Tarek Robbiati: Okay. A lot of questions into one question, but I will try my best. So first and foremost, the revenue growth that we are targeting for the full year is 5% to 7%, which at the midpoint is 6%, which is double what we originally anticipated. And that is because of all the puts and takes in our portfolio and the way we see supply easing on one side, also demand continuing unevenly although across our portfolio. And if you really look at our EPS guide, one thing I would like to emphasize for everyone on the call is that we did beat the midpoint of our guide by $0.09 and $0.03 of that beat pertained to OI&E and had to do with foreign exchange gains that are not operational. We continue to view OI&E on the full year basis being an expense of US$20 million to US$40 million due to elevated interest expenses.