HP REPORTED quarterly revenue that topped analysts’ estimates, including the first increase in personal computer (PC) sales in two years, an optimistic signal for a long-awaited rebound in the market.
Revenue from HP’s computer unit increased 3 per cent to US$8.4 billion in the fiscal second quarter, compared with the US$8.3 billion expected by analysts. The business had been declining since May 2022 on a year-over-year basis. The jump was due to commercial sales, which rose 6 per cent to US$6.2 billion. Consumer sales continued to decline, slipping 3 per cent to US$2.2 billion, the company said on Wednesday (May 29).
The PC market had seen a historic decline over the last two years after many consumers, businesses and schools purchased laptops in the early months of the pandemic. In the first quarter, shipments picked up 1.5 per cent – the first increase since the end of 2021 – industry analyst IDC said in April. PC-makers have been hopeful those numbers signalled the end of the slump and that growth would accelerate in 2024 with the launch of machines equipped with a new version of Microsoft’s Windows software as well as hardware equipped with chips to handle artificial intelligence (AI) tools.
AI PCs, such as those HP unveiled last week during a Microsoft conference, will be about 10 per cent of total shipments in the second half of the year, chief executive officer Enrique Lores said. The financial impact will be “much more relevant” in 2025 and 2026 as HP expects the number to climb to about 50 per cent of shipments three years after launch, he added.
The shares were little changed in extended trading after closing at US$32.80 in New York. The stock has gained 9 per cent this year – falling short of peer Dell Technologies which has more than doubled in value this year due to its excitement for its AI-capable servers. HP has failed to receive any similar “AI pixie dust” to boost its valuation, though the adoption of the new AI PCs could change that, wrote Toni Sacconaghi, an analyst at Sanford C Bernstein, before the results were released.
“Along with growth in shipments, AI PCs are also expected to carry higher price tags, providing further opportunity for PC and component makers,” Jitesh Ubrani, an analyst at IDC, said in April.
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In the period ended Apr 30, total sales declined less than 1 per cent to US$12.8 billion, compared with analysts’ average projection of US$12.6 billion. Profit, excluding some items, was 82 US cents a share, about in line with Wall Street estimates.
Sales in HP’s printing business fell 8 per cent to US$4.4 billion. The company introduced a subscription plan for printers earlier this year, which Lores said has been seeing success. A similar plan for consumer-oriented computers is being explored, he added.
For the fiscal third quarter, HP projected profit, excluding some items, of 78 US cents to 92 US cents per share. Analysts, on average, estimated 85 US cents, according to data compiled by Bloomberg. BLOOMBERG
