What The HP Result Reveals About Corporate Business Momentum
30 Agosto 2023 - 10:24AM
IH Market News
HP (NYSE:HPQ) lowered its full-year cash flow and earnings
forecasts due to a slower-than-expected recovery in the personal
computer (PC) market. As a result, the company’s stock plummeted in
premarket trading, down close to 9% by 8:10 am in New York.
Estimated free cash flow for the fiscal year ending in October
will be $3 billion, the Palo Alto, Calif.-based company said in a
statement. The previous forecast was around $3.25 billion. HP also
lowered its adjusted earnings forecast to a range of $3.23 to $3.25
a share from a previously projected range of $3.30 to $3.50 a
share.
Demand “is not improving as quickly as we had hoped,” CEO
Enrique Lores said in an interview.
High inventory levels across the industry are keeping PC prices
low, and business customers delayed purchases in the quarter due to
job cuts and general cost awareness, Lores said. The Chinese
economy also weighs on sales, he adds.
Personal computer sales suffered an historic decline last year
after the pandemic-time boom.
HP had expected a faster improvement in the second half of 2023,
with sales boosted by the back-to-school season after the Northern
Hemisphere holidays.
Gartner said in July that the PC market was showing signs of
stabilizing. Instead, however, the downgraded outlook indicates
that the unpredictability continues.
Fiscal third-quarter revenue fell 9.9% to $13.2 billion, below
the average analyst estimate of $13.4 billion. Consumer PC sales
fell a better-than-expected 12%, while those to businesses fell a
worse-than-expected 11%.
Weaker results in the enterprise segment reinforced concerns
about a prolonged reduction in corporate technology spending, Woo
Jin Ho, an analyst at Bloomberg Intelligence, said in a
post-earnings note.
Revenue from the printing business fell 7% to $4.3 billion.
Analysts on average were expecting $4.57 billion, according to data
compiled by Bloomberg. Adjusted earnings were 86 cents per share,
in line with estimates.
Despite being “in a tough market environment,” Lores praised an
IDC report that shows HP gained ground on rivals in the quarter.
“The recovery has started to happen, but it will be less
accelerated than we expected a quarter ago,” he said.
The shares closed quoted at US$ 31.37 in New York, accumulating
a gain of 17% this year.
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