HP Profit Falls Despite Strong Laptop Sales

Profits and sales at HP Inc have fallen in the previous quarter, despite the firm enjoying positive sales of laptop computers.

And whilst the results beat analyst expectations, a weak outlook sent shares in the company falling.

Falling Profit, Sales

HP Inc of course split from Hewlett-Packard Enterprises (HPE) last year. HP Inc sells laptops, PCs and printers (indeed the majority of HP Inc’s revenue comes from laptops), whereas HPE is focused on software and services.

For the third quarter ending 31 July HP Inc posted a net profit down 8 percent to $783m (£592.5m) or $0.48 per share, from $854m (£647m) a year earlier.

Revenue was also down by 4 percent to $11.9bn (£9bn) from $12.4bn (£9.4bn) in the same year-ago quarter.

It managed to beat Wall Street expectations as analysts had been expecting earning per share of $0.44 on revenue of $11.4bn.

“In Q3, we delivered on our financial commitments and continued to make solid progress in executing against our core, growth and future strategic framework,” said Dion Weisler, President and CEO, HP Inc. “Although the markets remain challenged, we have the innovation and executional rigour needed to continue to take profitable share and invest in the right opportunities to drive long-term success for the company.”

Unit Breakdown

Despite the declines, there was a little bit of good news in the results. Sales at the Personal Systems unit remained flat year-on-year, with commercial revenue down 3 percent whilst consumer revenue rose 8 percent.

This is because whilst HP found that businesses are still not buying laptops and desktops because of cost cutting, demand from the consumer market helped push total PC sales up 4 percent. Laptops rose 12 percent, but desktop PCs fell 6 percent, despite IDC predicting a fall of 4.5 percent in the overall PC market.

It seems as though HP benefited from the sales of higher margin devices such as gaming PC and premium notebooks.

There was less good news on the printer side, where revenues fell 14 percent year-on-year, and total printer sales 10 percent. Commercial hardware units were down 2 percent and consumer hardware units down 14 percent. Supplies revenue was also down 18 percent.

Whilst Wall Street was pleased at the strong showing of laptop sales, it was alarmed at the weak outlook HP gave for the current quarter, and shares in the company nearly 6 percent in extended trading on Wednesday.

They finished at $13.60 after the close.

Do you know all about HP, the IT firm from the garage? Take our quiz!