HP Inc. (HPQ) reported weaker-than-expected results for its latest quarter, but its CEO says the tech giant is poised to deliver stronger results as AI PCs grow and the company cuts costs. The company’s stock jumped more than 4% on Thursday.
CEO Enrique Lores told me in an interview on Yahoo Finance that the company will be more “aggressive” in its cost cuts to improve profits, primarily in the printing business. The cost cuts are part of a $1.6 billion plan that was developed nearly a year ago.
Shares were up 4% in early trading Thursday.
The company’s sales in the third quarter of the fiscal year were mixed.
Consumer PC sales fell 1% in the quarter, while commercial sales rose 8%. PC division sales overall rose 5%.
As in the previous quarter, commercial customers are upgrading their computers before Microsoft (MSFT) ending support for Windows 10 in October 2025.
In the second quarter, worldwide shipments of traditional PCs reached 64.9 million, up 3% from a year earlier, according to IDC data. It was the second quarter of growth after eight consecutive quarters of decline. China was the only weak spot, IDC said.
“Make no mistake, the PC market, like other technology markets, faces near-term challenges due to maturity and headwinds,” said Ryan Reith, group vice president, Worldwide Devices Tracking, IDC.
HP continues to struggle in its printing business amid fierce price competition and changing market conditions, including more people working from home rather than in the office.
Print sales fell 3% from the previous year. Consumer print sales increased 2%, while commercial sales fell 5%.
Operating margins in the printing business fell to 17.3% from 19% a year ago, and were the main culprit behind profits that missed Wall Street estimates.
HP’s results follow weak profits and cautious guidance from rival Xerox (XRX).
“Demand for laser and inkjet printers remains weak (particularly in China and Europe), which is negatively impacting HP’s printing and home supplies businesses,” said Amit Daryanani, an analyst at Evercore ISI. “We also note that aggressive pricing by competitors (taking advantage of a weaker yen) is a competitive headwind for HP.”
The Benefits Summary
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Net turnover: $13.5 billion (+2.4% year-on-year) versus $13.37 billion estimated
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Personal Systems Sales: $9.4 billion (+5% year-on-year) versus $9.1 billion estimated
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Print sales: $4.1 billion (-3% year-on-year) versus $4.25 billion estimated
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Diluted earnings per share (EPS): $0.83 (-3% YoY) vs. $0.86 estimated (forecast: $0.78-$0.92)
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