Hewlett Packard Co. fell as much as 4.2 percent in after-hours trading after the computing services provider gave a disappointing outlook for cash flow and profit.
Free cash flow in the fiscal year ending October 2024 will be roughly $2 billion, the company said Thursday at its annual investor meeting. Analysts on average had predicted $2.39 billion. Earnings, excluding certain items, will be about $1.92 per share, compared to estimates of $2.14.
Shares fell to $15.61 after closing at $16.30 in New York. A post-market drop threatens the stock’s 2.1% gain in 2023. HPE is a laggard among large tech companies in 2023: The company is well behind the Nasdaq 100’s 35% gain.
The Spring-based company has been trying to grow more profitable businesses like high-powered computing and services that provide more predictable revenue. “Today’s forecast showed that these growth drivers will materialize more than investors had hoped for,” said Wu Jinho, an analyst at Bloomberg Intelligence.
However, the company is on target for the third year in a row, following declines in fiscal 2019 and 2020. According to the company, sales will increase between 2% and 4% due to currency fluctuations through fiscal year 2026.
HPE said the high-performance computing and artificial intelligence segment will grow by double-digit percentages through fiscal year 2026. But the company is limited by the availability of high-powered graphics chips, said interim CFO Jeremy Cox.
Ahead of the event, Evercore analyst Amit Darianani said investors are focused on how much the company can gain from AI. In an investor presentation this month, rival Dell Technologies said interest in artificial intelligence was driving demand for its servers.
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