HP Forecast Below-Expectation Earnings Amid Waning PC Demand
A sign is posted in front of a Hewlett-Packard (HP) office in Palo Alto, California. The company has forecast its first-quarter profit below Wall Street expectations, a sign of persistent choppiness in demand in the personal computers market.
PC makers have seen demand retreat from its peak during the pandemic, when customers stocked up on tech products. Additionally, demand for AI-powered PCs has remained muted in the mass market, despite its growth in the corporate and educational sectors.
According to research firm Gartner, AI PCs are expected to account for 43% of all PC shipments by 2025, but only accounted for an estimated 17% this year. Gartner analyst Mikako Kitagawa noted that buyers have yet to see the clear benefits of AI PCs.
Global shipments of traditional PCs dipped 2.4% over the year earlier to 68.8 million units in the third quarter, according to IDC.
HP expects its adjusted profit per share to be between 70 cents and 76 cents for the first quarter, below analysts’ estimate of 85 cents. The company cited higher stock-compensation expense in the first quarter and stated that it is taking pricing and cost actions to offset margin headwinds in the personal systems segment, which will have a more significant impact in the second half.
For the fourth quarter, HP reported a 1.7% increase in revenue to $14.1 billion, meeting analysts’ estimates. The company’s adjusted profit of 93 cents per share also met expectations.
For fiscal 2025, HP forecast its adjusted profit to be between $3.45 and $3.75 per share, in line with analysts’ estimates.
