HP forecasts downbeat first-quarter profit amid slow PC market recovery
By Samrhitha A
(Reuters) -HP Inc on Tuesday forecast first-quarter profit below Wall Street estimates but maintained annual earnings outlook, a sign that demand in the personal computers market is still recovering, sending its shares down nearly 4% after market.
Companies such as HP, Lenovo and Dell have seen demand ease from peaks hit during the pandemic, when work-from-home trends boosted sales of laptops and other electronic devices.
HP expects first-quarter adjusted profit per share to be between 76 cents and 86 cents, the midpoint of which was below LSEG estimates of 86 cents.
The company said it is on track to launch AI PCs in the second half of next year and expects its penetration to increase gradually.
"While we don't think the market will immediately shift to AI PCs, we believe there will be a gradual uptick in the uptake, with some in 2024 and more penetration to come in 2025 and even more in 2026," CEO Enrique Lores said in a media call.
Recent earnings at major PC chipmakers have signaled that more than a two-year long slump in the market could be nearing an end as demand picks up ahead of the holiday season and an expected Windows update next year from Microsoft.
HP maintained fiscal 2024 adjusted profit forecast of $3.25 to $3.65 per share.
Its fourth-quarter revenue was $13.82 billion, slightly lower than the estimated $13.85 billion.
"We continue to see weak demand in China both across consumer and commercial. At this point we don't expect that to change and we've built that into our plans," Lores said.
Sales for HP's personal systems segment — home to its desktop and notebook PCs — fell 8% from a year ago, while its printing segment posted a 3% fall.
Peer Lenovo posted a decline in revenue last week. Dell is scheduled to release third-quarter results on Nov. 30.
(Reporting by Samrhitha Arunasalam in Bengaluru; Editing by Shilpi Majumdar)
