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HP tempered expectations for annual profit on Tuesday (Aug 29), as it grapples with a more than a year-long slump in the personal computers segment and sluggish demand in key market China.
Shares of the Palo Alto, California-based company fell 5.2 per cent in after-market trading.
Inflation and an uncertain global economy triggered a decline in demand for consumer electronics including PCs last year, and led to increased inventory across the supply chain.
“While we expect another quarter of sequential growth in the fourth quarter, the external environment has not improved as quickly as anticipated and we are moderating our expectations as a result,” said HP’s CEO Enrique Lores.
PC shipments including desktops, notebooks and workstations to China have dropped 19 per cent in the past few months as the region remains cautious about spending on IT, according to analysis firm Canalys.
“We don’t see it (a recovery in China) happening anytime soon. And at this point, we are not building that recovery in any of our plans,” Lores added.
HP now forecasts adjusted earnings per share to be in the range of US$3.23 to US$3.35 from earlier expectations of US$3.30 to US$3.50.
The company’s third-quarter revenue dropped 9.9 per cent to US$13.20 billion compared with analysts’ estimates of US$13.37 billion, according to Refinitiv data.
However, a focus on controlling costs helped the PC maker report adjusted earnings per share of 86 cents, in line with analysts’ estimates.
Total costs and expenses also fell 8.6 per cent from a year earlier.
The company remains on track to deliver 40 per cent of its three-year cost savings target by the end of the fiscal year.
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