HP Says Recovery In PC, Printer Sales Is Slower Than Expected

HP Inc. CEO Enrique Lores says the company previously anticipated higher sales for the third quarter and blamed macroeconomic issues for dragging down sales for PCs and printers. ‘The macro situation remains challenging. I don’t think this is news to anybody, and it’s not improving as quickly as we were expecting a quarter ago,’ he says.

HP Inc. CEO Enrique Lores said the company’s recovery from a slump in sales has been slower than expected, which has prompted the IT giant to temper expectations for the rest of its fiscal year.

The Palo Alto, Calif.-based tech firm on Tuesday reported a net revenue of $13.2 billion for the third quarter of its 2023 fiscal year, which ended July 31. That amounted to a 9.9 percent decline from the same period last year, but it was a small improvement over the previous quarter, when year-over-year sales declined 21.7 percent to $12.9 billion.

[Related: How Enrique Lores Is Turning HP Into A Hybrid Work Powerhouse]

HP’s revenue fell short of the average analyst estimate of $13.4 billion, according to Yahoo Finance, but its earnings per share of 86 cents were in line with Wall Street’s expectations.

The company’s stock price was down by more than 4 percent in after-hours trading.

In a call with journalists and analysts, Lores said HP previously anticipated higher sales for the period and blamed macroeconomic issues for dragging down sales for PCs and printers.

“The macro situation remains challenging. I don’t think this is news to anybody, and it’s not improving as quickly as we were expecting a quarter ago,” he said.

While HP expects its financial performance to improve in the fourth quarter, which ends Oct. 31, the company is “moderating” its expectations, according to Lores.

Despite HP’s slower-than-expected recovery, the company demonstrated “very strong operational performance” in multiple ways, Lores said. These areas of strength included improved operating margins from the previous quarter and a gain in PC market share, both sequentially and year-over-year.

PC Sales Suffer From High Inventory Levels

HP’s personal systems net revenue in the third quarter was $8.9 billion, down 11 percent from the same period last year.

Contributing to this was HP’s consumer PC business, which saw revenue decline 12 percent while unit shipments were up 8 percent.

The commercial business also suffered, with revenue declining 11 percent while unit shipments were about the same as last quarter.

Lores said one thing that hurt PC sales was high inventory levels held by the industry at large, which caused average selling prices to decrease.

“We from HP have been doing a lot of work to reduce our channel inventory, to normalize it and to get to the level where we would we want to be. Within the market, it’s still high, and therefore we’ll continue to see pressure on the price side,” he said.

As for revenue trends from HP’s acquisition of video conferencing vendor Poly, Lores said the business has been “impacted by the same macro trends that we see in the rest of the economy.”

At the same time, Lores said, the company has received a “very positive reaction both from our customers and partners” about the opportunities they see with HP adding Poly to its portfolio. He added that HP’s plan to bring Poly under its Amplify partner program will “drive better performance.”

Printer Sales Down In Consumer And Commercial Segments

HP’s printing net revenue was $4.3 billion, a 7 percent year-over-year decrease. Net revenue on the consumer side was down 28 percent while commercial only declined by 6 percent.

Hardware units dropped 19 percent, with consumer printers down by 20 percent and commercial printers down by 8 percent.

HP Proud Of ‘Progress’ In Services Business

Lores said HP grew quarter-over-quarter in its key growth areas, which consist of hybrid systems from Poly and elsewhere, gaming PCs, commercial services and solutions, consumer subscriptions, industrial graphics and 3-D printing solutions.

The chief executive said he was “especially proud” of the progress the company has made with its services business, known officially as the Workforce Services and Solutions group.

Asked by CRN about progress with HP’s effort to consolidate its commercial services into the Workforce Central toolbox, Lores said customer reception has been positive so far.

“We are now engaging with the first customers where this will be deployed,” he said, and the company plans to share more details about its services evolution in October.

Among the other exciting opportunities Lores sees for HP is the opportunity to integrate and to run generative AI applications at the edge in our PCs.” He added that the company is making “good progress” in this area, and HP plans to release its first products “about a year from now.”

“So to sum up, we are making continued progress. We’re also taking the right actions in the current environment, and we remain very confident in our long-term plan,” he said.