After Tuesday's close, HP Inc
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Quarterly Highlights
The Palo Alto, California-based company reported revenue declines in both personal systems and printing with net revenue contracting 6.5% YoY to to $13.82 billion, slightly lower than Wall Street's estimate of $13.85 billion. Personal Systems segment reported revenue contracted 8% to $9.4 billion while the printing division reported a sales drop of 3% to $4.4 billion. Earnings per share amounted to $0.97, improving from last year's comparable quarter when HP lost $0.02 per share.
AI To The PC Rescue
HP CEO Enrique Lores stated that the company believes the development of AI will double the growth of the PC category starting as early as next year, as new computers with AI capabilities will help accelerate and grow the PC market.
Lores stated that the PC market has begun to recover, while adding growth will also be supported by Microsoft that will be transitioning from Windows 10 to Windows 11. He also added that the second half of 2023 was stronger than the first half, with growth expected next year.
HP confirmed it is on track to launch AI PCs in the second half of 2024 while it expects a gradual increase in penetration to take place in 2025 and 2026. Last week, Lenovo also confirmed it will be releasing its first "AI PC", a PC that will be able to make use of AI without the internet in the second half of 2024.
Outlook
HP guided for first quarter adjusted profit per share in the range between 76 cents and 86 cents, while LSEG's consensus estimate amounted to 86 cents. As for the fiscal 2024, HP guided for adjusted profit in the range between $3.25 to $3.65 per share.
HP joined major PC makers, including Lenovo, in providing a positive signal that the two-year PC market slump could be coming to an end. Demand is likely to pick up for the holidays with Microsoft Corporation
The news came as a surprise considering that Microsoft was planning to retire the operating system in 2025 as the Copilot was initially available for Windows 11. But, Microsoft clearly made a significant strategy shift by committing to continue enhancing its Windows 10 software and expanding the reach of its AI -powered assistant to more than 1 billion users. But, considering its flagship software changed the way people across the globe interact with computers back in 1995, it seems right that even 'veteran' users get to experience the perks of the AI-enhanced software.
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