- Reports a 2.4% increase in revenue, reaching $13.5b, driven by a notable 10% growth in business computer sales, surpassing analysts’ expectations.
- Projects free cash flow of up to $3.6b and an annual adjusted profit of as much as $3.75 per share for 2025.
HP has issued a profit outlook for the current quarter that has fallen short of market expectations, primarily due to the adverse effects of escalating component costs and tariffs imposed on goods imported from China.
The company’s projected earnings, excluding certain items, to be between 75 cents and 85 cents per share for the period ending in April, whereas analysts had anticipated an average of 85 cents per share.
Chief Executive Officer Enrique Lores highlighted the significant challenges posed by rising component costs and US tariffs on imports from China, which are exerting pressure on the company’s profitability.
Investor sentiment
However, Lores emphasised that HP’s diverse supply chain is effectively mitigating much of this impact, with projections indicating that by the end of the fiscal year, less than 10 per cent of goods sold in North America will originate from China.
Investor sentiment has been increasingly wary regarding the implications of President Donald Trump’s proposed tariffs on the computer industry, which heavily depends on overseas manufacturing.
Despite these concerns, HP has maintained its strategic position, contributing to Trump’s inauguration fund earlier this year, indicating a complex relationship with the current administration.
In response to the tariffs, Lores mentioned that HP will implement “specific adjustments” in product pricing, reflecting the company’s proactive approach to navigating these economic challenges.
Additionally, HP plans to reduce its workforce by 1,000 to 2,000 employees by the end of the fiscal year, a move expected to generate approximately $300 million in annual savings.
In the fiscal first quarter ending January 31, HP reported a 2.4 per cent increase in revenue, reaching $13.5 billion, driven by a notable 10 per cent growth in business computer sales, surpassing analysts’ expectations.
In line with its commitment to innovation, HP announced earlier this month its acquisition of assets from Humane Inc., the developer of the wearable Ai Pin, for $116 million. This strategic move aligns with HP’s objective to enhance its portfolio with generative AI features, particularly through AI-optimized PCs.
Despite the current challenges, HP has reaffirmed its guidance for 2025, projecting free cash flow of up to $3.6 billion and an annual adjusted profit of as much as $3.75 per share.