HP revenue comes up short because of a soft PC market, sending stock down

HP Inc. missed on revenue because of a soft PC market but posted a better-than-expected bottom line Tuesday, sending its shares down more than 5% in after-hours trading. The company also said it returned $1.3 billion to shareholders in stock repurchases and dividends.

“We are taking clear actions to mitigate near-term market headwinds and further
strengthen our business for the future,” HP Chief Executive Enrique Lores told MarketWatch in an interview. He noted an improvement in the recent availability of key components such as power supplies.

Net revenue was $14.7 billion, down 4% from $15.3 billion a year ago.

The original Silicon Valley garage startup
HPQ,
-1.36%

 reported fiscal third-quarter net earnings of $1.1 billion, or $1.04 a share, compared with net earnings of $1.2 billion, or $1 a share, in the year-ago quarter. Adjusted earnings were $1.08 a share. HP provided guidance of between 79 cents and 89 cents a share for its current fourth quarter, compared with analysts’ forecasts of $1.05 a share.

Analysts surveyed by FactSet had expected net income of $1.04 a share on revenue of $15.6 billion in the second quarter.

HP’s personal systems sales, which include PCs and laptops, was the bread winner, at $10.1 billion, down 3% from the same quarter a year ago. The performance fell short of FactSet analyst estimates of $10.97 billion.

“HP did well in a sharply shifting market environment to deliver on its EPS, but was unable to escape the macroeconomic pressures that have caused a slowdown in consumer spending and more cautious procurement in the commercial and enterprise space,” Daniel Newman, principal analyst at Futurum Research, told MarketWatch. “HP’s growth areas like gaming and peripherals performed well in the bigger picture and should be bolstered by the Poly acquisition, which I expect will bolster its bigger hybrid work story.”

On Monday, HP said it closed its acquisition of Poly, a maker of workplace collaboration solutions.

Printer revenue, however, again declined 6% to $4.6 billion, a victim of supply-chain constraints.

HP’s stock has declined 17.5% this year. The broader S&P 500 index 
SPX,
-1.10%

 has dropped 16% in 2022.

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