A sign is posted in front of a Hewlett-Packard (HP) office on May 29, 2024 in Palo Alto, California.
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HP forecast its first-quarter profit below Wall Street expectations on Tuesday, in a sign of persistent choppiness in demand in the personal computers market.
PC makers have seen demand retreat from its peak during the pandemic, when customers stocked up on tech products. Besides, demand for AI-powered PCs has remained muted in the mass market even as it increased in the corporate and educational sectors thanks to businesses and institutions looking to upgrade their devices.
While AI PCs are expected to represent 43% of all PC shipments by 2025, they only accounted for an estimated 17% this year, according to research firm Gartner. AI PCs have not boosted the overall PC demand as “buyers have yet to see their clear benefits”, Gartner analyst Mikako Kitagawa said.
According to research firm IDC, global shipments of traditional PCs dipped 2.4% over the year earlier to 68.8 million units in the third quarter.
HP expects its adjusted profit per share to be between 70 cents and 76 cents for the first quarter, below analysts’ estimate of 85 cents, according to data compiled by LSEG.
“We have stock-compensation expense that’s higher in first quarter and it gets better in subsequent quarters,” said Chief Financial Officer Karen Parkhill.
“We are taking pricing and cost actions to offset some of the margin headwinds in the personal systems and that’s going to have a more significant impact in the back half.”
The company reported a 1.7% increase in revenue to $14.1 billion for the fourth quarter ended Oct. 31, compared with the estimates of $13.99 billion.
The PC maker’s adjusted profit 93 cents per share met expectations.
For the fiscal 2025, the company forecast its adjusted profit to be between $3.45 and $3.75 per share, the midpoint of which is in line with analysts’ estimate.