HP sales decline worse than expected as PC slump continues

HP reported sales that fell further than analysts’ estimated, a sign the company continues to be hamstrung by the ongoing slump in demand for personal computers.

Revenue declined 22 per cent to US$12.9 billion on a worse-than-expected drop in consumer PC sales, the company said on Tuesday (May 30) in a statement. HP’s Personal Systems segment fell 29 per cent to US$8.2 billion, compared with analysts’ average estimate of US$8.4 billion.

“The macro situation is obviously impacting demand across industries,” chief executive officer Enrique Lores said in an interview.

Still, Lores remains optimistic and the company affirmed its full-year forecast for cash flow.

“We think the second half will be stronger than the first,” Lores said, citing a reduction of inventory with channel parters and the traditionally high back-to-school and holiday sales seasons.

The shares declined about 1 per cent in extended trading, after closing at US$30.93 in New York. The stock has gained 15 per cent this year.

Free cash flow in the fiscal year ending in October will be about US$3.25 billion. The guidance is the same as that issued in February and assumes improving demand for personal computers in the coming quarters. HP also narrowed its forecast for fiscal-year adjusted profit to US$3.30 to US$3.50 a share, topping analysts’ average estimate, according to data compiled by Bloomberg.

The PC market showed “weak demand, excess inventory, and a worsening macroeconomic climate”, from January-March, industry analyst IDC reported last month.

Printing revenue slipped 5 per cent to US$4.7 billion in the period ended Apr 30. Analysts, on average, projected US$4.6 billion. The print business should perform similarly in the second half of the year, Lores said.

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HP maintains cash-flow outlook even as PC demand craters

New data showing stability in hybrid work has some benefits for HP, Meta Marshall, an analyst at Morgan Stanley, wrote in advance of the results. Printing, however, remains a category where spending continues to falter, she added.

HP reported profit, excluding some items, of 80 US cents a share in the quarter, topping the average estimate of 76 US cents. Adjusted earnings per share will be 81 US cents to 91 US cents in the current period ending in July, the Palo Alto, California-based company said.

Chief financial officer Marie Myers said the company is on-track to deliver 40 per cent of its US$1.4 billion in planned savings by the end of 2023. BLOOMBERG