HP Inc Misses Revenue Target As PC Demand Slows, Shares Dip

Inflation-hit customers cutting back on personal computer purchases have impacted HP Inc's second-quarter revenue, causing the tech giant to fall short of Wall Street expectations. As a result, the company's shares dipped by nearly 3 per cent in after-hours trading.

The slowdown in sales heavily impacted HP's Personal Systems segment, which encompasses desktop and notebook PCs, as it faced a substantial 29 per cent decline. Additionally, the printing segment also saw a 5 per cent decrease in revenue.

Despite the disappointing second-quarter results, HP remains cautiously optimistic about the future. CEO Enrique Lores, in an interview with Reuters, stated that the company expects the second half of the year to exhibit stronger demand, particularly in the consumer segment. Lores highlighted that a partner event held during the quarter focused on AI-driven opportunities, and HP is actively collaborating with key software and silicon partners to develop innovative PC architectures that will fuel a PC refresh in the coming years.

As a response to the challenging market conditions, HP has adjusted its annual profit forecast. The company now anticipates annual adjusted profit to be in the range of USD 3.30 per share to USD 3.50 per share, compared to the previous forecast of USD 3.20 to USD 3.60 per share.

HP's second-quarter revenue stood at USD 12.91 billion, falling short of analysts' expectations of USD 13.07 billion, according to Refinitiv data. On an adjusted basis, the company reported earnings of 80 cents per share, surpassing analyst estimates of 76 cents per share.

The latest results reflect the shifting landscape for PC manufacturers as the effects of the pandemic wane and market conditions evolve. HP remains focused on adapting to changing customer needs and technological advancements, positioning itself to capitalise on future opportunities in the industry.

HP, along with other major PC manufacturers such as Lenovo and Dell Technologies, experienced a decline in demand after reaching peak sales during the pandemic. The surge in remote work and learning necessitated a rise in laptop and electronic device purchases. However, with the easing of work-from-home trends, global PC shipments witnessed a significant drop of nearly 30 per cent in the January-March period, falling below pre-pandemic levels, according to research firm IDC.