HP Inc., the computer and printer manufacturer, has lowered its full-year forecast due to a delay in the recovery of PC demand. As a result, the company’s stock dropped by 9% in early Wednesday trade. This disappointing news reflects a worse-than-expected industry recovery in the PC market, with analysts attributing the downturn to increased channel inventory and a competitive pricing environment.
HP Inc. was founded in 2015 as part of the splitting of the Hewlett-Packard company, along with Hewlett Packard Enterprise (HPE). Both companies reported their quarterly results on Tuesday after the market closed. HP Inc. reported a profit per share of 86 cents for the third quarter, which was in line with analysts’ expectations. However, revenue fell nearly 10% year-over-year to $13.20 billion, worse than the expected decline of over 8%.
The company’s largest business unit, Personal Systems, experienced an 11% drop in sales year-over-year to $8.93 billion. Although this was slightly better than expected, it was not enough to offset the underperformance of the printing business segment, which generated $4.26 billion in sales during the third quarter. Analysts were expecting $4.57 billion in revenue from this segment.
HPE, on the other hand, raised its full-year profit forecast despite shares slipping on Wednesday. The company now expects adjusted earnings per share (EPS) of $2.13, up from the prior forecast of $2.10. Revenue is still expected to grow by 5%, slightly ahead of expectations.
For the third quarter, HPE posted a profit per share of 49 cents, beating analysts’ consensus of 47 cents. Revenue rose 0.7% year-over-year, in line with expectations. The Intelligent Edge segment saw a significant increase in sales of 50% year-over-year, while other segments, such as Compute and HPC & AI, fell short of revenue expectations.
Both companies are operating in a tough macro environment, which has led to conservative forecasts and cautious management. However, HP Inc. remains confident in its ability to drive long-term growth and value creation. CEO Enrique Lores stated, While we expect another quarter of sequential growth in Q4, the external environment has not improved as quickly as anticipated, and we are moderating our expectations as a result.
HPE is confident in its strategic shift towards edge, hybrid cloud, and AI, which it delivers through its HPE GreenLake platform. CEO Antonio Neri said, Our strategic shift toward edge, hybrid cloud, and AI delivered through our HPE GreenLake platform is working.
Overall, both companies face challenges in the PC market but remain focused on driving growth and value creation. HP Inc. has adjusted its full-year forecast, while HPE has raised its profit outlook. It remains to be seen how the companies will navigate the difficult market conditions and if they can capitalize on the expected recovery in PC demand.
