(Reuters) -Hewlett Packard Enterprise forecast annual profit and revenue below Wall Street expectations on Wednesday, as it shifts its server business toward artificial intelligence and networking following its Juniper Networks acquisition.
Shares of the company were down about 8.5% in after-hours trading.
Starting in the first quarter of fiscal 2026, the company will merge its server, hybrid cloud and financial services business segments into a newly created segment: cloud & AI.
HPE is targeting growth in the booming artificial intelligence infrastructure market, as businesses ramp up hardware and software spending to support AI.
“In HPE’s new chapter, our strengthened portfolio will create more profitable growth, increasing capital return opportunities that deliver even greater value to our shareholders,” CEO Antonio Neri said.
HPE’s Juniper acquisition is expected to double its networking business and close the gap with rival Cisco Systems.
HPE projects fiscal 2026 adjusted earnings to be between $2.20 and $2.40 per share, the midpoint of which was below the analysts’ average estimate of $2.40 apiece, according to data compiled by LSEG.
Revenue for FY26 is expected to grow between 5% and 10%, compared with estimates of 17.2% growth.
The company said it plans to cut jobs as part of its integration of Juniper Networks, estimating the total cost of the reductions at about $240 million.
HPE expects fiscal 2026 free cash flow to be between $1.5 billion and $2 billion, compared with estimates of $1.88 billion.
It said its operations will be organized into three main segments — cloud & AI, networking, and corporate investments and other — starting next fiscal year.
(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Alan Barona)
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