NEW YORK: Hewlett Packard Enterprise Co (HPE) gives an outlook for profit and cash flow for its upcoming fiscal year that falls short of analysts’ estimates, reflecting a margin crunch in the artificial intelligence (AI) era. The shares fell in extended trading.
Earnings, excluding some items, will be US$2.20 to US$2.40 a share in the year ending in October 2026. Free cash flow will be US$1.5bil to US$2bil, HPE said Wednesday in a statement. Analysts, on average, projected profit of US$2.41 and free cash flow of US$2.4bil, according to data compiled by Bloomberg.
HPE, one of the largest makers of computing equipment, is betting on networking as a major prong of its future expansion with the July acquisition of Juniper Networks Inc for about US$13bil. It has also seen increased demand for high-powered servers used for AI workloads.
“We’re poised to gain share in the markets that matter most to our customers,” chief executive officer Antonio Neri said in the statement, which coincided with the company’s analyst day event.
Still, HPE is dealing with tighter margins in part due to building servers with expensive AI chips that have made the machines less profitable. — Bloomberg
