Hewlett Packard Enterprise, the corporate enterprise software and hardware business for Hewlett-Packard lowered its profit forecast for the full year as the business is facing intense competition in cloud related business as well as struggling with a U.S. dollar that remains strong.
Shares of the company fell 6.7% in trading after hours on Thursday. Over the last 12 months, the stock gained close to 88% prior to Thursday’s drop.
HPE cited as well the higher costs of commodities and some issues of near term execution for the lowering of its profit forecast for the year.
Since separating in 2015 from Hewlett Packard, HPE has sold most of the traditional software services it had, while building its businesses that are cloud-related, which has put it up against much larger and more established companies such as Dell-EMC and Cisco Systems.
One analyst in the industry said that the cut was a combination of more pressure from the movements of foreign exchange and an enterprise environment that has become highly competitive.
Close to 61% of revenue at HPE is generated from outside the U.S.
HPE announced that it is expecting an adjusted profit for the full year of between $1.88 and $1.98 a share, which is down from its previous forecast of between $2.00 and $2.10.
Analysts were expecting profit to be just over $2.05 a share. HPE reported its revenue that also missed for its fiscal first quarter that ended January 31.
Revenue was down 10.4% ending at $11.4 billion which was short of estimates by analysts that averaged $12.07 billion.
Revenue from the company’s enterprise group, the biggest in the company and one that offers storage, networking services and servers, was down over 12% ending the quarter at $6.31 billion.
Excluding certain items, HPE has per share earnings of 45 cents, which edged past analyst estimates by a single penny.
The company, based in Palo Alto, California also forecasted adjusted profit for its ongoing quarter in the range of between 41 cents and 45 cents per share. Market analysts have projected a profit for HPE for the current quarter of 47 cents.
HP Inc posted revenue that was better than had been expected earlier this week, citing a more stabilizing PC markets giving it biggest boost.