HP Q1 Profit Forecast Falls Short Amid Sluggish PC Demand

HP, a leading name in the personal computer industry, has recently forecasted its first-quarter profit to fall below Wall Street expectations. This announcement, made on Tuesday, highlights the ongoing challenges faced by the PC market, which has been experiencing sluggish demand. As a result, HP's shares dropped by 8.4 percent in extended trading, reflecting investor concerns about the company's future performance.

During the pandemic, demand for personal computers surged as customers rushed to purchase tech products for remote work and online learning. However, that demand has since retreated, leaving PC makers like HP grappling with a significant decline in sales. Furthermore, while there has been a growing interest in AI-powered PCs, this demand has not translated into widespread consumer purchases. Gartner analyst Mikako Kitagawa noted that “buyers have yet to see their clear benefits,” which has contributed to the muted demand in the mass market.

According to research firm IDC, global shipments of traditional PCs fell by 2.4 percent year-over-year, totaling 68.8 million units in the third quarter. This decline underscores the challenges that HP and other PC manufacturers are facing as they navigate a post-pandemic market landscape.

HP's Chief Financial Officer, Karen Parkhill, indicated that the company expects its adjusted profit per share to range between 70 cents and 76 cents for the first quarter, which is below analysts' estimate of 85 cents. Parkhill explained, “We have stock-compensation expense that's higher in the first quarter and it gets better in subsequent quarters.” She also mentioned that HP is implementing pricing and cost strategies to mitigate some of the margin pressures in its personal systems segment, with expectations for a more significant impact in the latter half of the fiscal year.

In its recent report, HP announced a 1.7 percent increase in revenue, reaching $14.1 billion for the fourth quarter ending October 31. This figure surpassed estimates of $13.99 billion, and the company's adjusted profit of 93 cents per share met expectations. Looking ahead to fiscal 2025, HP has forecasted an adjusted profit between $3.45 and $3.75 per share, aligning closely with analysts' predictions.

As the PC market continues to evolve, it is crucial for companies like HP to adapt to changing consumer preferences and technological advancements. The shift towards AI and other innovative technologies presents both challenges and opportunities. For consumers, this means staying informed about the latest developments in the tech world, as the landscape is likely to change rapidly in the coming years. Understanding these trends can help consumers make informed decisions about their tech purchases, ensuring they invest in products that meet their needs and expectations.