HP Sees Strong Quarter As Cost Cuts, Easing Supply Chain Woes Help

PC maker HP Inc on Tuesday (Feb 28) forecast second-quarter adjusted profit above estimates and reaffirmed its full-year earnings target, expecting to benefit from cost cuts and higher shipments as supply chain pressures ease.

HP also said 900 employees in the United States were taking voluntary retirement as part of its previously announced plan to reduce 4,000 to 6,000 jobs through 2025, sending its shares up more than 2% in extended trading.

“We have made good progress reducing the channel inventory,” chief executive Enrique Lores told Reuters in an interview.

Lockdowns in China, a key supplier of electronic components and also a major market, had resulted in inventory buildup at HP last year.

“In our second-half, the channel inventory will have been normalised and therefore just because of normal seasonality the sales of PCs will be stronger,” Lores said.

HP forecast second-quarter adjusted per share earnings between 73 cents and 83 cents, above analysts’ average estimate of 76 cents. It also maintained its full-year adjusted profit target of US$3.20 to US$3.60 per share.

The strong profit forecast overshadowed a nearly 19% drop in first-quarter revenue to US$13.8 billion (RM61.9 billion) that also missed analysts’ average estimate of US$14.12 billion, according to Refinitiv data.

Lores said there was a “slowdown” in orders from businesses, adding that companies are now becoming “much more careful in how they manage budgets.”

While a complete recovery in PC and peripheral sales is not expected anytime soon, there are signs of some improvement.

PC shipments are expected to be down 6.8% this year, compared with a 16% decline last year, according to projections by market research firm Gartner. – Reuters

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