HEWLETT Packard Enterprise (HPE) slid as much as 4.2 per cent in postmarket trading after the computing services provider delivered a disappointing outlook for cash flow and profit.

Free cash flow will be roughly US$2 billion in the fiscal year ending in October 2024, the company said on Thursday (Oct 19) during its annual investor meeting. Analysts had anticipated US$2.39 billion on average. Profit, excluding some items, will be about US$1.92 per share, compared with a US$2.14 estimate.

The shares fell as low as US$15.61 after closing at US$16.30 in New York. The post-market dip threatens to erase the stock’s 2.1 per cent gain in 2023. HPE has been a rare laggard among major tech companies in 2023: It has trailed well behind the 35 per cent rally in the tech-heavy Nasdaq 100.

The Spring, Texas-based company has been trying to rev up more lucrative businesses, such as high-powered computing and services that deliver more predictable revenue. Today’s forecast showed these growth drivers are taking longer to materialise than investors hoped, said Bloomberg Intelligence analyst Woo Jin Ho.

Still, the company is on target for its third consecutive year of revenue gains after declines in fiscal year 2019 and 2020. Sales will increase between 2 per cent to 4 per cent, adjusted for currency fluctuations, till fiscal 2026, the company said.

The high-powered computing and artificial intelligence (AI) segment will grow by a percentage in the “double digits” till fiscal year 2026, HPE said. But the company is constrained by the availability of high-powered graphics chips, interim chief financial officer Jeremy Cox said.

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Investors have been focused on how much upside the company could get from AI, Evercore analyst Amit Daryanani said before the event. At an investor presentation this month, rival Dell Technologies said AI interest was fuelling demand for its servers. BLOOMBERG