Hewlett Packard Enterprise has withdrawn previously issued fiscal year 2020 guidance in the wake of the economic uncertainty caused by the coronavirus pandemic.
HPE said that while it is “actively working to mitigate the impact” of the pandemic on its business, it is “unable to predict” the impact on its financial performance.
“HPE is unable to predict the extent to which the global COVID-19 pandemic may adversely impact its business operations, financial performance and results of operations,” the company said in a Securities and Exchange Commission filing on Monday morning. “As a result of the increased level of uncertainty arising since the date of the (March 3) earnings announcement, HPE has determined that it is necessary to withdraw its previously issued financial guidance. HPE has a strong balance sheet and liquidity profile.”
In the same filing, HPE said it has also suspended share repurchases.
Shares of HPE were up eight percent or 74 cents to $10.06 in early afternoon trading with stocks up after a big sell off last week.
The decision to withdraw guidance comes with a number of other companies – including Dell and VMware – pulling financial forecasts in the wake of the coronavirus.
At its annual shareholder’s meeting last week, HPE CEO Antonio Neri said that it is too early to “assess the impact” that the coronavirus will have on IT demand.
“We continue to monitor this very closely,” said Neri. “There will be ups and downs, but the reality is that it will take some time to really assess the impact.”
Neri said HPE is monitoring the impact of the coronavirus on a daily basis. “We have a very rigid, structured approach on what we call our containment process,” he said.
About 85 percent of HPE’s total products and services are sold through enterprise and public sector and 15 percent through the SMB (small medium business) market, said Neri. “Obviously, we see the SMB market kind of stalled at this point in time,” he said.
That said, some partners have seen a surge in purchases from customers moving quickly to a work at home model.
In fact, 71 percent of managed service providers and 49 percent of VARs/systems integrators said they are seeing a spike in customer requests for work-at-home products and services as a result of the coronavirus pandemic, according to a survey of solution providers and IT decision-makers by CRN USA parent The Channel Company.
A top executive for an HPE partner, who did not want to be identified, agreed that it is too early to determine the full impact from the pandemic. He said his company experienced a strong March, but has also seen a fall off in projects that were set to be rolled out this quarter.
“It totally remains to been seen what the ultimate financial impact is going to to be on our business,” he said. “We have a strong healthcare, public sector and higher education business that is keeping us going, but we also support a number of non-essential businesses who have been forced to close because of the coronavirus.”
The top executive said he believes the company will see a surge in IT spending and projects once businesses that have been shut down return to work.“Our thinking is there is going to be a lot of pent-up demand,” he said. “We just need to get through the next few months.”
Before the coronavirus was declared a pandemic, HPE had reaffirmed its fiscal year 2020 guidance during its second quarter earnings call on March 3. At that time, HPE said it expected fiscal year 2020 GAAP diluted net EPS outlook of $1.01 to $1.17 and non-GAAP diluted net EPS outlook of $1.78 to $1.94.