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HP Inc. (HPQ) reported earnings Wednesday afternoon and I want to analyze them because I think they might be representative of what’s to come next year.

Revenue was -11% year over year and laptop revenue – their biggest segment – was -23%. HPQ reported a 10% decline in EPS year over year but that underestimates the hit to the business. That’s because HPQ reduced its diluted share count by 12% from 1,142 million a year ago to 1,009 million via share buybacks. Net income itself was off 21%. HPQ earned $4.08/share for their fiscal year that ended October 31, 2022, but guided FY23 to $3.20-$3.60.

As you can see HPQ’s business is getting hit pretty hard and my suggestion is that what we’re seeing here may be representative of the earnings contraction to be felt more broadly next year. If so, stocks have not yet found a sustainable bottom, and the bear market marches on.

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