On February 27, HP Inc exceeded first-quarter revenue expectations due to the strong performance of its personal systems division and the increasing demand for artificial intelligence-capable systems.
As part of its restructuring plan, HP announced a further reduction of 1,000 to 2,000 employees, anticipating cost savings of approximately $0.3 billion by fiscal 2025.
Despite this positive news, the company's shares declined over 3% in after-hours trading following its projection of second-quarter adjusted earnings per share between 75 cents and 85 cents, falling short of analysts' consensus estimate of 86 cents.
The PC market is forecasted to see growth this year, driven by the imminent Windows 10 end-of-support deadline prompting PC users to upgrade. Additionally, a rise in demand is expected as companies introduce AI-capable PCs with cutting-edge processors tailored for AI applications.
However, concerns over profit margins have emerged following President Donald Trump's announcement of additional tariffs on Chinese goods. HP is mitigating risks by diversifying its supply chain, aiming for over 90% of products sold in North America to be manufactured outside of China by October.
HP experienced a robust performance in the PC market, with total shipments of desktops, notebooks, and workstations increasing by 5% to 67.9 million units in the fourth quarter, as per Canalys data from January.
In the first fiscal quarter ending on January 31, HP reported revenue of $13.5 billion, surpassing the average analyst estimate of $13.36 billion. In particular, net revenue for HP's Personal Systems segment, which includes desktop and notebook PCs, grew by 5% to $9.2 billion, with commercial net revenue expanding by 10%.