Doom and gloom surrounded Hewlett Packard Enterprise Co. today after the company reported flat fiscal second-quarter earnings and revenue amid rising concern for business spending on technology hardware.

The company reported a net profit of $250 million, slightly below the $259 million profit it delivered in the same period one year ago. Earnings before certain costs such as stock compensation came to 44 cents per share. Revenue for the period was also flat, at $6.71 billion compared to $6.7 billion one year earlier.

The results came in just below Wall Street’s targets of 45 cents per share in earnings and $6.8 billion in revenue. HPE’s stock sank by more than 6% in extended trading following the report, erasing a slight gain made earlier in the day.

HPE explained that its profit was hurt by a $126 million charge relating to its suspension of business operations in Russia.

Antonio Neri (pictured), president and chief executive officer of HPE, sought to highlight the company’s “significant order growth” and the “accelerating interest” from customers in its edge-to-cloud portfolio and its HPE GreenLake platform. “I am optimistic that demand will continue to be strong, given our customer’s needs to accelerate their business resilience and competitiveness,” he added.

Neri’s optimism couldn’t hide the fact that many of the company’s numbers were a disappointment for investors. The company has faced doubts ever since Cisco Systems Inc. provided a lower forecast last month, sparking fears that businesses are cutting back on their technology spending budgets.

Those fears were apparently justified, with sales from HPE’s largest compute business segment staying flat at $3 billion in the quarter. Storage fared even worse, with sales of $1.1 billion, down 3% from the same period a year earlier. HPE’s financial services revenue also declined 2%, to $823 million.

There were a couple of bright spots. HPE’s high-performance computing and artificial intelligence unit delivered $710 million in sales, up 4%, and the intelligent edge business generated $867 million, up 8% from a year ago.

HPE has high hopes for the intelligent edge business, which includes HPE GreenLake, a portfolio of hardware and software products that enterprises can buy on a pay-as-you-go basis instead of purchasing everything upfront. During the quarter, the company announced a broad expansion of GreenLake.

Notably, the platform is now fully integrated with the Aruba Central network management system of its HPE Aruba subsidiary, which allows more than 120,000 Aruba customers to order network equipment and services on demand. In addition, the company added a number of new cloud services to GreenLake that span networking, data services, HPC and operations management.

The new additions seem to have been well-received, with HPE reporting that as-a-service orders rose by 107% from the same period one year ago, the third straight quarter in which orders have doubled or better. In addition, it reported that Aruba Services revenue increased by double digits, while intelligence edge-as-a-service annual recurring revenue rose more than 50%.

Charles King of Pund-IT Inc. told SiliconANGLE that it’s difficult to find much to get excited about in HPE’s earnings announcement. He said that while the intelligent edge and AI/HPC groups delivered decent growth, those businesses account for less than a quarter of the company’s overall revenue.

“The rest of HPE’s business units were either flat or down,” King said. “Although the problems HPE cited, such as business in Russia and supply chain pressures, are a challenge, they may also have led investors to believe that the company is less financially buoyant than they’d hoped for. With HPE’s guidance essentially flat it’s not surprising that some shareholders have decided that opportunities are brighter elsewhere.”

Holger Mueller of Constellation Research Inc. was kinder in his assessment of the company’s performance, saying HPE did OK in a tough business environment, delivering slight growth despite supply chain challenges and the exit from Russia. “It’s good to see the as-a-service offerings growing and doubling, so clearly HPE is onto something there,” he added. “But when other strong categories like HPC grow less than 10% and volume businesses like compute and storage are flat or shrink, then it’s tough sledding for the company.”

Looking to the third quarter, HPE is expecting earnings of between 44 cents and 54 cents per share, the midpoint of which is just below Wall Street’s forecast of 52 cents per share.

HPE also updated its full-year guidance, saying that it forecasts earnings of between $1.96 to $2.10 per share, versus the consensus estimate of $2.09. The company said it sees sales in a range of $28.62 billion to $28.89 billion, ahead of Wall Street’s forecast of $28.59 billion.

“It’s good to see HPE’s executives are confident they can meet full-year revenue guidance,” Mueller said. “They must have optimism that the next two quarters will be much better.”

Photo: SiliconANGLE