Shares of the personal computer maker HP Inc. tumbled in after-hours trading today as the company reported lower-than-expected sales and offered weak guidance for the next three months.

The company reported fiscal third-quarter earnings before certain costs such as stock compensation of $1.04 per share, in the middle of the $1.03 to $1.08 range it had forecast earlier. Revenue for the period came to $14.7 billion, down 4.1% from a year earlier. Net profit for the quarter came to $1.1 billion, flat from the year before. The results were mixed, with Wall Street expecting earnings of $1.03 per share on higher revenue of $15.6 billion.

HP’s stock had held up fairly well this year but has come under pressure recently. Having dropped by about 9% in the three days prior to today’s earnings call, it then fell 6% more in extended trading today as investors digested the news. For the year to date, HP’s stock is now down 16%.

Despite investor reaction, the results weren’t really all that surprising, as they mirrored the cautious guidance and lower financial results of companies such as Dell Technologies Inc., Nvidia Corp., Intel Corp. and Micron Technologies Inc., among others.

HP President and Chief Executive Enrique Lores (pictured), said disciplined pricing and cost management in the quarter, combined with momentum in the company’s growth business, helped it deliver solid earnings growth while returning $1.3 billion to shareholders. “We are taking clear actions to mitigate near-term market headwinds and further strengthen our business for the future,” he added. “I’m confident in our ability to execute against our priorities to drive long-term sustainable growth and value creation.”

HP said its personal systems business, which includes the PCs it sells, delivered revenue of $10.1 billion in the quarter, down 3% from a year earlier and below Wall Street’s consensus estimate of $11 billion. Within the segment, consumer revenue dropped 20%, while commercial sales rose 7%.

HP’s other main business is printing, where revenue fell 6% from a year earlier, to $4.6 billion, just shy of the consensus of $4.76 billion. Commercial print revenue fell 3%, while consumer revenue rose by 1%. Revenue from the sale of printing supplies was down 9%, and printing hardware was down 3%.

In terms of guidance, HP said it’s expecting to see earnings in a range of 79 to 89 cents per share, some way below Wall Street’s estimate of $1.04 per share. For fiscal 2022, HP sees profit in a range of $4.02 to $4.12 per share, down from its earlier forecast of $4.24 to $4.38 a share and also below Wall Street’s target of $4.27.

“The pandemic boom is over for HP, though it is still ahead for the first nine months of the year,” said Holger Mueller of Constellation Research Inc. “The team around Enrique Lores tamped back costs, taking over $300 million out of all cost categories, and that was enough to preserve profitability. The question is, what offerings does HP have for the important holidays season to find more or at least enough growth?”

On a conference call, Lores said the company remains on schedule with its pledge to return at least $16 billion to shareholders, which was made after the company successfully fended off a hostile takeover attempt by rival Xerox Corp. back in 2020.

In the longer term, Lores insisted that the company remains confident in the prospects of its business. The CEO stressed that HP is “doubling down” on key growth areas, though he warned of a possible slowdown in PC orders from commercial customers. He explained that these are being “more cautious, more measured” than before.

Photo: HP