HP blames ‘external environment’ as revenues shrink

Dive Brief:

Hewlett-Packard’s revenues declined in its fiscal third quarter compared with a year earlier, as it struggled with weakened customer demand in a tough economic environment, the global computer manufacturer said Tuesday.
The Palo Alto, California-based company generated $13.2 billion in net revenues during the quarter, down 9.9% year over year, according to a press release. On a quarter-over-quarter basis, the company performed better, delivering 2% net revenue growth.
Back-to-school demand helped to boost the sequential results, CFO Marie Myers said during a Tuesday earnings call. But the company also “saw continued commercial enterprise softness driven by cautious spending and delayed purchase decisions,” she said.

Dive Insight:

While the overall outlook for enterprise IT spending this year is positive, devices spending will suffer due to the “ongoing impact of inflation on consumer purchasing power,” Gartner reported last month.

“The devices segment is experiencing one of its worst growth years on record,” John-David Lovelock, a research vice president at Gartner, said in a press release at the time. “Even as inflation eases slightly in some regions, macroeconomic factors are still negatively impacting discretionary spending and lengthening device refresh cycles.”

Global IT spending is projected to total $4.7 trillion in 2023, up 4.3% from 2022, with the software segment experiencing double-digit growth, according to Gartner. However, devices spending is expected to decline 8.6% this year and is not expected to recover to 2021 levels until at least 2026, it said.

HP reported that its third quarter “personal systems” net revenue was $8.9 billion, down 11% year over year. Its printing net revenue was $4.3 billion, down 7% year over year.

The company adjusted its outlook for the full year. It now expects 2023 earnings per share of $3.23 to $3.35, down from its previous outlook of $3.30 to $3.50.

“While we expect another quarter of sequential growth in Q4, the external environment has not improved as quickly as anticipated and we are moderating our expectations as a result,” HP CEO Enrique Lores said in the Tuesday release.