HP failed to estimate revenue because inflation dampened demand for PCs

(Reuters) – HP Inc. (HPQ.N) missed Wall Street’s targets for second-quarter revenue on Tuesday as inflation-hit customers spent less on the company’s PCs, sending its shares down nearly 3% in extended trade.

Companies such as HP, Lenovo (0992.HK) and Dell Technologies (DELL.N) have seen demand ease from peaks reached during the pandemic, when work-from-home trends drove sales of laptops and other electronic devices.

Global PC shipments fell nearly 30% from January to March to levels lower than before the pandemic, according to data from research firm IDC.

Sales of HP’s personal systems segment — the home of desktop and notebook computers — fell 29% in the reported quarter, while the company’s printing segment posted a 5% decline.

HP said it expects second-half revenue to be higher than the first-half, though the year-over-year comparison will still be negative.

“From a demand perspective, especially from the consumer side, the second half is stronger,” Chief Executive Enrique Lloris said in an interview with Reuters.

The PC maker now expects adjusted annual earnings of $3.30 to $3.50 per share, compared to the $3.20 to $3.60 in a previous forecast.

At this quarter’s partner event, AI-driven opportunities were talked about, Loris said, and added that the company is working with key software and silicon partners to create new PC architectures that will drive PC modernization in the years to come.

California-based HP’s revenue in the second quarter of last year was $12.91 billion. Analysts had expected $13.07 billion, according to Refinitiv data.

On an adjusted basis, HP earned 80 cents a share, compared to forecasts of 76 cents.

Additional reporting by Tiashi Datta in Bengaluru and Jeffrey Dustin in Palo Alto; Additional reporting by Bharat Govind Gautam. Editing by Devika Syamnath and Christopher Cushing

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