HP Inc. (HPQ) on Tuesday reported second-quarter revenue that missed Wall Street estimates, signaling that demand for personal computers is slowing.
The Palo Alto, California-based company reported revenue of $12.91 billion in the quarter, below analysts' expectations of $13.07 billion, according to Refinitiv data.
HP's Personal Systems segment, which includes its desktop and notebook PCs, saw revenue fall 29% year-over-year. The company said the decline was due to a number of factors, including supply chain constraints, inflation, and the ongoing war in Ukraine.
HP's printing segment also saw revenue decline, falling 5% year-over-year. The company said the decline was due to a number of factors, including the ongoing transition to digital printing and the impact of the war in Ukraine.
Despite the revenue miss, HP's earnings per share beat analysts' expectations. The company earned 80 cents per share in the quarter, compared to analysts' expectations of 76 cents.
HP's CEO Enrique Lores said that the company is seeing signs of improvement in the PC market, with demand starting to pick up in the second half of the year.
"From a demand perspective, especially on the consumer side, the second half is stronger," Lores said in an interview with Reuters.
HP now expects annual adjusted profit between $3.30 per share and $3.50 per share, compared with its previous forecast of $3.20 to $3.60 per share.
The company's shares were down about 3% in extended trading following the earnings report.
The revenue miss is a sign that the PC market is slowing, which could have implications for HP's stock price. However, the company's earnings beat suggests that the company is still profitable, and the CEO's comments suggest that demand could improve in the second half of the year. Overall, the stock is a hold at this time.
Here are some factors to consider when evaluating HP stock:
- The PC market is slowing, but HP is still profitable.
- Demand for PCs could improve in the second half of the year.
- The company is facing supply chain constraints and inflation.
- The company is facing competition from Dell and Lenovo.
Overall, HP stock is a hold at this time. The company is facing some challenges, but it is still profitable and has a strong brand. If the PC market improves in the second half of the year, the stock could see some upside.
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