HP Inc. continues to navigate a tough economy, with all eyes on artificial intelligence and a PC rebound later in the year.
The PC and printer giant
HPQ,
on Tuesday reported fiscal second-quarter net earnings of $1.07 billion, or 80 cents a share, compared with net earnings of $1 billion, or 95 cents a share, in the year-ago quarter. After stripping out costs, including restructuring charges, the company reported earnings of $1.07 a share, down from $1.10 a share a year ago.
Net revenue plunged 22% to $12.9 billion from $16.5 billion a year ago.
Analysts surveyed by FactSet had expected adjusted earnings of 76 cents a share on revenue of $13.07 billion.
“Our disciplined execution and strong innovation in a tough macro environment allowed us to deliver non-GAAP EPS at the high end of our target in [the second quarter],” HP Chief Executive Enrique Lores said in an interview, adding that PC sales should rebound in the second half of the year and into 2024.
Lores spotlighted AI as a “tremendous refresh opportunity” to “redefine what PCs can do,” such enabling PC owners to order up deep spreadsheet analysis via the cloud without compromising security.
HP’s personal-systems sales, which include PCs and laptops, hauled in $8.2 billion, but plunged 29% from the same quarter a year ago. The performance fell short of FactSet analyst estimates of $8.4 billion.
Printing revenue dipped again by 5% from a year ago, to $4.7 billion.
HP offered strong third-quarter adjusted earnings guidance of between 81 cents and 91 cents a share. Analysts polled by FactSet expect on average 85 cents a share.
HP’s stock was initially flat off the quarterly results in extended trading Wednesday before falling 5%.
“While the PC industry has had a difficult run in 2023, HP is showing a bit of encouragement with its increase in guidance and its reduced inventory,” Daniel Newman, principal analyst at Futurum Research, said in an email.
Shares of HP have improved 15% so far this year, while the S&P 500
SPX,
is up 9.5%.
Meanwhile, Hewlett Packard Enterprise Co.
HPE,
posted fiscal second-quarter net earnings of $418 million, or 32 cents a share, compared with net earnings of $250 million, or 19 cents a share, in the year-ago quarter. Adjusted earnings were 52 cents a share.
Net revenue was $6.97 billion, up 4% from $6.7 billion a year ago.
“It was a solid quarter as we are shifting to higher-margin revenue streams in AI [up 18% year over year to $840 million] and the Intelligent Edge segment [$1.3 billion],” HPE Chief Financial Officer Tarek Robbiati said in an interview.
Analysts surveyed by FactSet had expected, on average, net earnings of 49 cents a share on revenue of $7.3 billion.
HPE offered third-quarter revenue guidance of $6.7 billion to $7.2 billion, at the low end of FactSet projections of $7.2 billion. HP’s forecast of third-quarter earnings of between 44 cents and 48 cents a share was in line with FactSet projections of 46 cents a share.
The revenue shortfall and guidance sent HPE shares down 5.6% in extended trading Wednesday. HPE’s stock has dropped nearly 3% so far this year.
