HPE revealed it walked away from a $700 million AI hardware deal over concerns about the customer.
CEO Anthonio Neri told analysts on the enterprise IT vendor’s most recent earnings call that the company chose to “de-book” the order for an unnamed client because it considered it too risky.
When questioned about the order, which would have accounted for more than half of the company’s expected $1.2 billion AI-related income in the last quarter, Neri said: “We de-booked a large order, which was $700 million during the same quarter because we had concern with a specific customer.
“We pride ourselves on a very strong control of this environment, and we continue to be very vigilant about how we engage, and making sure we manage the risk.
He added: “We felt that already carried a lot of risk, and therefore we felt it was very prudent to de-book it and focus on other areas of the business.”
Neri did not name the company in question, but such a large order is likely to have involved HPE purchasing hundreds of AI GPUs, which are both expensive and difficult to source.
HPE CFO Marie Myers said: “AI systems orders can be lumpy and this is an example of that.”
Overall, HPE brought in $8.5 billion for the three months to the end of October 2024, 15 percent up year-on-year. Server revenue was $4.7 billion, up 32 percent, but the company saw a dip in earnings from its Intelligent Edge division, which brought in $1.1 billion, a 20 percent year-on-year dip.
HPE continues to be a key player in the high-performance computing hardware space, and all three of the world’s fastest supercomputers, per the latest edition of the Top 500 list, are built by the company’s Cray division.
Neri said the HPE’s $14 billion purchase of Juniper Networks, which has received regulatory approval in key markets, is likely to close in early 2025.
