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HP Inc profit forecast misses Street on weak PC, printer sales

Wednesday, November 25, 2015 - 07:45
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Hewlett-Packard Enterprise Chief Executive Officer (CEO) Meg Whitman speaks during a press conference in New York on Nov 2, 2015.

[NEW YORK] HP Inc, which houses former Hewlett-Packard Co's legacy printer and PC business, forecast adjusted profit for the first quarter below market expectations as it struggles with weak sales of PCs and printers.

However, Hewlett Packard Enterprise Co, which is headed by Meg Whitman and holds the corporate hardware and services businesses, maintained its adjusted profit forecast for the year.

HP Inc's shares were down 7.1 per cent in extended trading on Tuesday, while HPE's shares were up 2.3 per cent. "Looking ahead, we expect the PC market to remain challenged for more quarters to come," HP Inc's Chief Executive Dion Weisler said on a conference call with analyst.

PC sales have been falling sharply worldwide and the recent launch of Windows 10 has so far failed to reboot the industry.

Revenue in HP's personal computer and printer businesses fell about 14 per cent in the fourth quarter ended Oct 31, pushing Hewlett-Packard Co's overall revenue down for the fifth straight quarter.

The results are the last for Hewlett-Packard Co, the tech pioneer that split into two separate companies this month, before HP Inc and Hewlett Packard Enterprise Co start to report separately.

The 76-year-old company has struggled in recent years to keep up with newer technologies and trends, such as the shift by consumers to smartphones and tablets and by businesses to the Internet to store and manage large amounts of data.

HP Inc forecast adjusted profit of 33-38 cents per share for the quarter ending January, missing analysts' average estimate of 42 cents, according to Thomson Reuters I/B/E/S.

The company also cut its 2016 adjusted profit forecast to US$1.59-$1.69 per share from US$1.67-$1.77 per share.

Hewlett-Packard Co's revenue from enterprise services division fell 9 per cent, while revenue from its enterprise group rose 2 per cent.

Overall, revenue at Hewlett-Packard Co fell 9.5 per cent to US$25.71 billion.

Net income fell to US$1.32 billion from US$1.33 billion a year earlier. But on a per share basis, profit rose to 73 cents per share from 70 cents, based on fewer shares outstanding.

Up to Tuesday's close of US$13.69, HPE shares had fallen 7 per cent since their market debut on Nov 2.

In contrast, HP Inc's shares, which closed at US$14.64, had risen about 20 per cent.

REUTERS