HP beats estimates, weak printer demand weighs on forecast
Published 25/08/2016 | 08:55
HP, the hardware business of the former Hewlett-Packard, reported higher-than-expected quarterly revenue and profit as demand recovered for its notebooks.
However, HP forecast current-quarter profit below analysts' estimates, reflecting weak sales of its printers as companies cut costs across industries.
HP's shares fell nearly 6pc in extended trading on Wednesday.
Third-quarter revenue from the company's computer business rose 7.5pc from the second quarter as sales of notebooks improved.
From a year earlier, sales were flat in the business, which accounts for two-thirds of HP's total revenue, showing signs of recovery after a drop in the past two quarters.
Notebook volumes increased 12pc, but the benefit was offset by weak desktop sales and low demand from commercial clients.
Revenue from its printer business declined 14.3pc from a year earlier and 4.6pc from the second quarter.
"The markets remaining challenging and somewhat volatile," Chief Executive Dion Weisler said on a conference call. "We have more work to do."
HP said it cut about 1,000 jobs in the third quarter, taking the total number of job cuts to about 2,300 this year.
The company, which had about 287,000 employees as of Oct. 31, said in February that it expected to slash around 3,000 jobs by the end of this fiscal year.
HP forecast adjusted earnings of 34-37 cents per share from continuing operations for the current quarter.
Analysts on average were expecting 41 cents per share, according to Thomson Reuters I/B/E/S.
Net earnings from continuing operations rose more than a fifth to $843m, or 49 cents per share, in the three months ended July 31, as costs fell about 9pc.
Excluding items, HP earned 48 cents per share, beating the average analyst estimate of 44 cents.
Total revenue fell 3.8pc to $11.89bn (£8.9bn), but topped the average estimate of $11.46bn.
HP shares were trading at $13.60 after the bell.
Up to Wednesday's close, the stock had risen 12.5pc since HP started trading as a separate company.