- HPE CEO Antonio Neri reveals plans for “agile pricing” in response to memory shortages
- Customers are also encouraged to reconsider configurations
- The company currently has a server order backlog of $5 billion
HPE has changed its terms to now allow price increases after a quote has already been issued if component costs increase prior to shipment, in response to ongoing price fluctuations and global hardware shortages.
Speaking on an earnings call following its Q1 results, HPE CEO Antonio Neri said the company would adopt an “agile pricing position” with shorter offer commitment cycles to protect its margins.
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HPE says it will change quoted prices if costs rise
“We have changed our offer terms with the right to reprice existing orders for increases in raw material costs between offer and shipment,” Neri said.
In addition to seeking to bolster margins by passing on price fluctuations to customers, HPE has also expanded long-term supply agreements with silicon and memory partners so it doesn’t have to pass on those price increases as much.
In the meantime, the company is warning customers that they should reconsider alternative configurations to manage demand. Neri credited European customers for changing course in response to chip shortages without being deterred by price increases.
Despite troubling times in the chip world, HPE still posted a 150% year-over-year increase in networking revenue to $2.7 billion, though much of that was driven by the acquisition of Juniper Networks. The networking business represents about 30% of HPE’s total revenue, but more than half of its operating profit.
HPE also admitted that it currently has a $5 billion server order backlog, but CFO Marie Myers expects AI hardware orders to ship in the second half of 2026.
Overall, HPE exceeded [its] profitability expectations and cash flow targets,” and the company’s shares are up about 3% since the announcement.
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