HP GAVE an outlook for profit in the current quarter that fell short of estimates, suggesting a setback in the personal computer (PC) market’s recovery from a yearslong slump.
Earnings, excluding some items, will be 70 US cents to 76 US cents a share in the fiscal first quarter, the company said on Tuesday (Nov 26). Analysts, on average, projected 86 US cents in the period ending in January, according to data compiled by Bloomberg. For the fiscal year, profit will be US$3.45 to US$3.75 a share, compared with an average estimate of US$3.60.
An increase in component costs, rather than any issues with demand, is hurting profitability, chief executive officer Enrique Lores said. Prices of parts should decline as the year goes on, he added.
The shares fell about 6 per cent in extended trading after closing at US$39.10 in New York. The stock had jumped 30 per cent this year to the close.
The PC market had seen a historic decline in recent years after many consumers, businesses and schools purchased laptops in the early months of the pandemic. While signs of a rebound began to materialise this year, shipments again dipped in the third quarter, industry analyst firm IDC said in October.
PC makers had hoped that new machines touted as better for artificial intelligence workloads would spur demand. But “buyers have yet to see clear benefits or business value”, Mikako Kitagawa, an analyst at Gartner, said last month.
For the fiscal fourth quarter, HP reported sales increased 1.7 per cent to US$14.1 billion, just ahead of analyst expectations. It marked the company’s second consecutive period of year-over-year revenue growth after eight straight quarters of declines. Profit, excluding some items, was 93 US cents per share, in line with estimates.
HP’s personal computer business reported revenue rose 2 per cent to US$9.59 billion, missing the average estimate of US$9.74 billion. This was due to a smaller-than-expected boost in sales of computers to business. The release of Microsoft’s new edition of Windows has not fuelled PC demand as quickly as in previous releases, Lores said.
HP’s printing segment grew 1 per cent to US$4.5 billion, the first expansion for the business since late 2021. Analysts, on average, predicted a decline of almost 4 per cent. BLOOMBERG
