HP (HPQ) printed another mixed quarter.
The PC and printing giant saw fiscal first-quarter sales drop 18.8% year-over-year amid a more cautious spending backdrop among consumers and businesses.
“I think the decline of sales is really driven by the situation that we see in the market driven by the macroeconomy,” HP CEO Enrique Lores told.
Printer sales fell 5% from a year ago. Consumer and commercial PC sales declined 36% and 18%, respectively.
Despite the large sales drops, the company beat analyst forecasts on earnings. Here’s how HP’s first-quarter results compared to Wall Street estimates:
HP shares rose about 3% in pre-market trading.
Amid the weak top-line results, operating profit margins contracted 240 basis points in HP’s personal systems segment (PCs). Margins were up 80 basis points in the printing segment.
Lores says HP is already starting to see a lift to its margins from various cost-cutting measures, notably a large round of layoffs late in 2022.
“We are impressed with HP’s results given the dour PC trends in calendar Q1 2023 following a difficult 2022,” Citi analyst Jim Suva said.
The company took a cautious stance for its new fiscal year after the challenging quarter for sales.
For the second fiscal quarter, HP sees EPS in a range of $0.73 to $0.83. Analysts had estimated earnings of $0.76 per share in the current quarter.
The company is modeling for full-year earnings of $3.20 to $3.60 a share, a reiteration of its prior outlook. Wall Street had been estimating full-year earnings of $3.29 per share.
“Our expectation is that the second half [of the year] will be stronger than the first half,” Lores added.