HP Q1 Earnings Meet Mark, Revenues Miss, Shares Fall

HP Inc.’s (HPQ - Free Report) first-quarter fiscal 2019 non-GAAP earnings from continuing operations of 52 cents per share are in line with the Zacks Consensus Estimate. Meanwhile, the metric improved 8% on a year-over-year basis.

HP’s total revenues of $14.7 billion missed the Zacks Consensus Estimate of $15.1 billion but inched up 1% year over year. Weaker-than-expected sales in both its personal systems and printing businesses were dampeners.

Management alleged rising macro uncertainties and price sensitivity among customers to be undermining the company’s high-margin Printing business. Change in customer purchasing behavior with more commercial customers buying items online, negatively impacted HP’s Supplies share. Further, given the high inventory and pricing issues, the company expects sales for the Printing segment to decline over the rest of the year.

Moreover, Intel’s (INTC - Free Report) CPU shortages are likely to persist through the first half of 2019.  Adverse currency volatility is another headwind to the company.

Shares slipped 0.2% at the close of trading session and the stock further declined in after-hours trading.

Quarter in Detail

The Personal Systems segment generated revenues (65.6% of total) of $9.7 billion, up 2.3% year over year. Industry-wide supply constraints and a tough year-over-year comparison were overhangs.

Consumer and Commercial revenues increased 1% and 3% year over year, respectively.

HP’s total unit sales fell 3% with Notebooks registering a 1% dip and Desktop units, down 8%. However, revenues from Notebooks and workstations grew 5.8% and 5.5%, respectively, while that of Desktops slid 3.3%.

Coming to the Printing business, the segment’s revenues (34.4%) were down 0.4% year over year to $5.1 billion. While growth in hardware revenues, increase in unit share and progress in contractual offering were a positive, the same was offset by disappointing total Supplies revenues, which affected the Printing business.

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