HP Inc. Forecasts Quarterly Profit That Falls Short of Estimates Thinkstock

HP Inc. Forecasts Quarterly Profit That Falls Short of Estimates

What can Hewlett Packard, Inc. do to turn its fortunes around?

HP Inc., which sells personal computers and printers, forecast fiscal fourth-quarter profit that may fall short of analysts’ estimates as the company grapples with slumping market demand for its products. The shares fell as much as 5.8 percent in extended trading after the announcement.

Key Points

Profit from continuing operations, excluding some items, will be 34 cents to 37 cents a share in the current quarter, HP said Wednesday in a statement. That would fall short of analysts’ projections of 40 cents. The company reported profit, excluding some items, of 48 cents a share in the fiscal third quarter ended July 31, topping analysts’ estimates of 45 cents, according to data compiled by Bloomberg. Sales fell 3.8 percent to $11.9 billion, compared with estimates of $11.5 billion.

Big Picture

Chief Executive Officer Dion Weisler is investing in higher-end products to help bolster profitability as he navigates mature markets that aren’t growing. Operating margin during the quarter widened to 9.4 percent from 8.1 percent a year earlier. The company split last year from Hewlett Packard Enterprise, which focuses on software and hardware for corporate customers.

CEO Interview

“This was a quarter all about execution,” Weisler said in an interview. “We know that we have more work to do, but the team is rising to that challenge nicely.”

The Detail

Sales of personal systems, which includes the computer lines, of $7.5 billion was unchanged from a year earlier. That compares with a decline of 10 percent in the second quarter. Commercial sales fell 3 percent while the consumer business climbed 8 percent in the personal systems unit. Printing revenue declined 14 percent to $4.4 billion, compared with a decline of 16 percent in the previous quarter. Consumer printing sales fared worse than the commercial business. HP forecast full-year profit excluding some items of $1.59 to $1.62 a share. Analysts estimated $1.62. The stock, which has gained 22 percent so far this year, earlier dropped 1.2 percent to $14.40 at the close in New York.

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