HP Inc. (NYSE: HPQ) shares fell in pre-market trading Wednesday as the leading IT company delivered a grim outlook for its first-quarter profits, revealing figures below Wall Street estimates. The company, however, stood firm on its annual earnings outlook, indicating a cautious optimism about the ongoing recovery in the personal computers market.
Industry leaders, including HP, Lenovo, and Dell Technologies (NYSE: DELL), are grappling with a slowdown in demand that had peaked during the pandemic-driven work-from-home era, boosting sales of laptops and electronic devices.
HP Inc. (NYSE: HPQ) forecasts an adjusted first-quarter profit per share ranging from 76 to 86 cents, with the midpoint falling short of the analysts’ average estimate of 86 cents, according to LSEG data.
Investors responded negatively to the news, causing HP stock to drop by 2.26% to $27.24 in pre-market trading on Wednesday.
The company remains on track to launch its AI-powered PCs in the second half of the coming year, with CEO Enrique Lores stating in a media call,
“Don’t think the market will immediately shift to AI PCs, we think there will be some penetration in ’24 and stronger in ’25.”
Earnings reports from the leading PC chipmakers, such as Intel Corporation (NASDAQ: INTC) and Advanced Micro Devices (NASDAQ: AMD), also signal a potential end to the more than two-year-long slump in the market. The demand is picking up ahead of the holiday season and an anticipated Windows update from Microsoft Corporation (NASDAQ: MSFT) next year.
HP is holding firm on its fiscal 2024 adjusted profit forecast range of $3.25 to $3.65 per share.
The fourth-quarter revenue of $13.82 billion slightly missed LSEG estimates of $13.85 billion.
CEO Enrique Lores stated,
“Continue to see weak demand in China both across consumer and commercial and at this point we don’t expect that to change.”
HP’s personal systems segment, including desktop and notebook PCs, saw an 8% drop in sales, while its printing segment experienced a 3% decline compared to the previous year.
