A sign is posted in front of the Hewlett-Packard (HP) offices on May 29, 2024, in Palo Alto, California.
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HP It forecast its first-quarter profit on Tuesday to be below Wall Street expectations, pointing to continued volatility in demand for personal computers.
PC makers have seen demand fall from peaks during the pandemic, when customers stocked up on technology products. Additionally, mass-market demand for AI-powered PCs remains subdued as businesses and institutions look to upgrade their devices, despite increased demand from the enterprise and education sectors.
According to data from research firm Gartner, although artificial intelligence PCs are expected to account for 43% of all PC shipments by 2025, they accounted for only 17% this year. Gartner analyst Mikako Kitakawa said that artificial intelligence PCs have not boosted overall PC demand because “buyers have not yet seen its obvious benefits.”
According to data from research firm IDC, global traditional PC shipments decreased by 2.4% year-on-year in the third quarter to 68.8 million units.
HP expects first-quarter adjusted profit per share to be between 70 cents and 76 cents, below analysts’ expectations of 85 cents, according to data compiled by LSEG.
“Our stock-based compensation expense was higher in the first quarter and will improve in subsequent quarters,” Chief Financial Officer Karen Parkhill said.
“We are taking pricing and cost actions to offset some margin headwinds in individual systems, which will have a more significant impact in the second half.”
The company reported revenue rose 1.7% to $14.1 billion in the fourth quarter ended Oct. 31, compared with expectations of $13.99 billion.
The PC maker’s adjusted profit was 93 cents per share, in line with expectations.
For fiscal 2025, the company expects adjusted profit to be in the range of $3.45 to $3.75 per share, with the midpoint in line with analysts’ expectations.
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