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HP Cuts Earnings Outlook Amid Rising Chip Costs
25 Feb
Summary
- HP lowered fiscal-year earnings expectations due to rising memory chip costs.
- First-quarter results exceeded analyst expectations despite profit decline.
- Revenue increased by 6.9% driven by personal systems business growth.
HP has adjusted its fiscal-year earnings forecast to reflect the lower end of its previous guidance, primarily due to escalating memory chip expenses and a dynamic operating environment. This recalibration follows a first-quarter performance that surpassed analyst projections, with revenues reaching $14.44 billion, an increase of 6.9% year-over-year.
The company's personal systems division saw an impressive 11% revenue jump, driven significantly by demand for artificial intelligence-powered personal computers. This growth helped to counterbalance a 2% decrease in printing revenue, which fell to $4.19 billion.
In response to these cost pressures, HP has indicated plans to increase product prices, source components from lower-cost suppliers, and optimize memory configurations. The company is also actively pursuing AI integration across its operations to enhance product development and automate processes, including workforce reductions announced earlier this year.
Despite a slight year-over-year dip in profit to $545 million (58 cents per share) for the first quarter, adjusted earnings per share reached 81 cents, exceeding the 77 cents anticipated by analysts. The company projects second-quarter adjusted earnings per share between 70 cents and 76 cents.
