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HP Inc.’s stock rose slightly Tuesday after the personal-computer maker reported quarterly earnings that beat Wall Street estimates despite a steep drop in revenue and GAAP earnings being cut in half.
HP
HPQ,
posted fiscal first-quarter net earnings of $487 million, or 49 cents a share, down from net earnings of $1.1 billion, or 99 cents a share, in the year-ago quarter. After stripping out costs, including restructuring charges, the company reported earnings of 75 cents a share, down from $1.10 a share a year ago.
Net revenue was $13.8 billion, down 19% from $17 billion a year ago. Analysts surveyed by FactSet had expected adjusted earnings of 74 cents a share on revenue of $14.1 billion.
“We continue to see a slowdown in consumer and corporate enterprise sales,” HP Chief Executive Enrique Lores told MarketWatch in an interview ahead of the public release of fiscal first-quarter results Tuesday. “Corporations are more conservative in spending, and slowing down orders.”
Lores added that channel inventory has improved, and like other tech CEOs he expects sales to be stronger in the second half of the year as PC demand picks up.
HP’s personal systems sales, which include PCs and laptops, remained the top moneymaker, at $9.2 billion, though it plunged 24% from the same quarter a year ago. The performance fell short of FactSet analyst estimates of $9.6 billion.
Printing revenue slid 5% to $4.6 billion from a year ago.
HP offered second-quarter adjusted earnings guidance of between 73 cents and 83 cents a share. Analysts polled by FactSet expect on average 76 cents a share.
“While the near-term macro will remain challenging for HP, it’s diversification into hybrid work as well as opportunities in areas like AI at the edge should set up a strong comeback toward the back end of ’23 as inventories normalize and demand begins to see momentum,” Daniel Newman, principal analyst at Futurum Research, told MarketWatch in a message.
During a conference call with analysts late Tuesday, HP said that beginning next quarter it will continue to report revenue under personal systems and print. But within personal systems, it will break out sales by consumer and commercial vs. previous disclosures by product category such as desktops and laptops. “This better aligns with how we think about and manage the business,” an HP spokesperson said in an email to MarketWatch. The print category will not change.
The financial news sent HP’s stock up more than 2% in extended trading Tuesday. During the regular session, the company’s shares were flat at $29.50.
Shares of HP have gained 10% so far this year. The broader S&P 500 index
SPX,
is up 3%.
In the previous quarter, Lores said the company was launching a three-year workforce reduction plan meant to shed 4,000 to 6,000 jobs, with more than half of the roughly $1 billion in restructuring costs expected to be realized in the new fiscal year. The cuts amount to about 10% of the company’s workforce.
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