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HP earnings: Sales decline ‘driven by the macroeconomy,’ CEO says

Brian Sozzi
·Executive Editor
Updated ·2-min read

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 Yahoo Finance.

LAS VEGAS, NEVADA - JANUARY 04: HP President and CEO Enrique Lores speaks during a keynote address at CES 2023 at The Venetian Las Vegas on January 04, 2023 in Las Vegas, Nevada. CES, the world's largest annual consumer technology trade show, runs from January 5-8 and features about 3,100 exhibitors showing off their latest products and services to more than 100,000 attendees. (Photo by David Becker/Getty Images)
HP President and CEO Enrique Lores speaks during a keynote address at CES 2023 at The Venetian Las Vegas on January 04, 2023, in Las Vegas, Nevada. (Photo by David Becker/Getty Images) (David Becker via Getty Images)

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:

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  • Net Sales: $13.8 billion vs. $14.15 billion estimated

  • Personal Systems Sales: $9.2 billion vs. $9.65 billion estimated

  • Printing Sales: $4.6 billion vs. $4.49 billion estimated

  • Diluted EPS: $0.75 vs. $0.74 estimated

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.

Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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