- HPE CEO Antonio Neri reveals plans for “agile pricing stance” in response to memory shortage
- Customers are also encouraged to reconsider configurations.
- The company has a $5 billion server backlog right now.
HPE has changed its terms to now allow price increases after a quote has already been issued if component costs increase before shipping, in response to continued price volatility and global hardware shortages.
On an earnings call following first-quarter results, HPE CEO Antonio Neri said the company would adopt an “agile pricing stance” with shorter quote commitment cycles to protect its margins.
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HPE says it will change quoted prices if costs rise
“We have modified our quoting terms with the right to modify prices on existing orders to increase commodity costs between quoting and shipping,” Neri said.
In addition to seeking to shore up margins by passing along price fluctuations to customers, HPE has also expanded long-term supply agreements with silicon and memory partners so it doesn’t have to pass along those price increases as much.
In the meantime, the company warns customers that they should reconsider alternative configurations to manage demand. Neri credited European customers for changing course in response to the chip shortage without being discouraged by price increases.
Despite tough times in the chip world, HPE still posted a 150% year-over-year increase in networking revenue to $2.7 billion, although a big chunk of that was driven by the acquisition of Juniper Networks. The networking business accounts for about 30% of HPE’s total revenue, but more than half of its operating profits.
HPE also admitted it has a $5 billion server order backlog right now, but CFO Marie Myers expects AI hardware orders to ship in the second half of 2026.
Overall, HPE “outperformed [its] profitability expectations and cash flow measures,” and the company’s shares have risen about 3% since the announcement.
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