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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