HP Inc. (HPQ) missed expectations in its most recent quarterly earnings, but the company's CEO said the tech giant is poised to perform better thanks to an increase in AI-powered PCs and cost savings.
CEO Enrique Lores told Yahoo Finance that the company plans to become more “aggressive” in cutting costs, primarily to boost profits in its printing business. The cost-cutting is part of a $1.6 billion plan drawn up nearly a year ago.
The company's third-quarter sales results were mixed.
Consumer PC sales declined 1% during the quarter, while commercial sales increased 8%. Overall PC division sales increased 5%.
As in the previous quarter, business customers are upgrading their computers ahead of Microsoft's (MSFT) end of support for Windows 10 in October 2025.
Global shipments of traditional PCs totaled 64.9 million units in the second quarter, up 3% from the same period last year, according to data from IDC. This marks the second consecutive quarter of growth after eight consecutive quarters of declines. China was the only weak spot, according to IDC.
“To be clear, the PC market, like other technology markets, faces near-term challenges due to maturity and headwinds,” said Ryan Rees, group vice president, Worldwide Device Trackers at IDC.
HP continues to face challenges in its printing business amid fierce price competition and a changing market, including more people working from home rather than in the office.
Print sales were down 3% year over year: consumer print sales increased 2%, while commercial was down 5%.
The printing division's operating margin fell to 17.3% from 19% a year ago, which was the main reason why profits fell short of Wall Street expectations.
HP's results came on the heels of weak earnings and a cautious outlook from printing rival Xerox (XRX).
“Weak demand for laser and inkjet printers (especially in China and Europe) is negatively impacting HP's home printer and consumables business,” said Amit Daryanani, an analyst at Evercore ISI. “Aggressive pricing by peers (taking advantage of the weak yen) is also creating competitive headwinds for HP, he noted.”
Revenue Breakdown
Net sales: $13.5 billion (up 2.4% year over year); expected: $13.37 billion
Personal Systems Revenue: $9.4 billion (5% increase from last year), expected to be $9.1 billion
Printing revenue: $4.1 billion (-3% YoY), versus forecast of $4.25 billion
Diluted EPS: $0.83 (-3% YoY), expected to be $0.86 (guidance: $0.78-$0.92)
Other notable findings
The story continues
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