What happened

Shares of Hewlett Packard Enterprise (NYSE:HPE) slumped on Friday following the release of the company's fiscal first-quarter report. Revenue tumbled more than expected, and HPE slashed its full-year earnings guidance due to various headwinds. The stock was down 7.5% at 3 p.m. EST.

So what

HPE reported first-quarter revenue of $11.4 billion, down 10% year over year and $670 million below the average analyst estimate. Excluding the effects of currency and divestitures, revenue declined by 4%. Enterprise group sales, which includes servers, storage, and networking, slumped 12% to $6.3 billion. Enterprise services sales dropped 11% to $4 billion, software sales fell 8% to $721 million, and financial services revenue rose 6% to $823 million.

The HP Enterprise sign in front of the company's headquarters.

Image source: HP Enterprise.

Non-GAAP EPS came in at $0.45, up from $0.41 in the prior-year period and $0.01 higher than analysts were expecting. Non-GAAP net income excludes $505 million worth of charges related to separation costs, restructuring, and other items.

HPE's outlook for fiscal 2017 got a haircut, with the company pointing to foreign exchange movements, higher commodities pricing, and near-term execution issues. Non-GAAP EPS for the full year is now expected in the range of $1.88 to $1.98, $0.12 below the company's previous outlook.

Now what

HPE CEO Meg Whitman downplayed the company's problems: "I believe HPE remains on the right track. The steps we're taking to strengthen our portfolio, streamline our organization, and build the right leadership team, are setting us up to win long into the future."

HPE is set to spin-off its enterprise services business, which will then merge with Computer Sciences Corp. What will remain following the spin-off -- primarily enterprise hardware like servers and storage -- didn't fare any better than the services segment during the first quarter. With revenue tumbling and guidance slashed, investors had plenty of good reasons to sell off the stock on Friday.