HP Inc. delivered mixed financial results in its final quarter of fiscal 2024, and followed up with weak guidance for the current period. Investors recoiled, and the company’s stock tumbled more than 7% in extended trading.

The personal computer and printer manufacturer delivered fourth-quarter earnings of 93 cents per share, exactly in line with Wall Street’s forecast, while revenue fell 4% from a year earlier, to $13.2 billion, below analysts’ target of $14 billion.

Profitability took a hit as well, as HP reported net earnings of $906 million for the quarter, down from $974 million one year earlier. The company also reported total revenue in fiscal 2024 of $53.6 billion, which was more or less flat compared to the prior year.

HP President and Chief Executive Enrique Lores (pictured) said he was pleased enough with the company’s performance, with revenue growing on a sequential basis for the second successive quarter. “With momentum heading into fiscal 2025, we are well-positioned to capitalize on the commercial opportunity and lead the future of work,” he insisted.

Analysts had expected HP’s PC segment to deliver $9.8 billion in sales in the previous quarter, but the company came up just short of that target, reporting $9.6 billion, up 2% from a year earlier.

Within that segment, commercial sales rose by 5%, while consumer sales fell 4%. Operating margins within the unit fell sharply from a year ago.

On a call with analysts, Lores said the company is benefiting from commercial customers, which are looking to upgrade their PCs before Microsoft Corp. ends support for Windows 10-based computers in October 2025.

However, he said the consumer PC market is under pressure, with many people holding off on buying a new computer in anticipation of a new generation of so-called AI PCs, which are able to run sophisticated artificial intelligence applications locally. AI PCs feature AI capabilities embedded into their hardware and software, which is typically graphics processing units or neural processing units. This enables them to handle complex AI tasks locally without needing cloud resources.

HP recently announced a new lineup of AI PCs, featuring a new memory architecture that ensures high performance for more complex workflows and AI-enabled videoconferencing, but sales of those machines are yet to take off.

The numbers tally with a recent report from International Data Corp., which said earlier this month that global shipments of PCs fell 2.4% in the third quarter from the same period a year earlier.

IDC analyst Jitesh Ubrani told Yahoo Finance that demand for PCs among consumers and commercial buyers is returning to the market. The problem is that most of that demand is concentrated on entry-level machines. But the analyst believes HP and other computer makers can be optimistic about the future.

“Newer AI PCs such as Copilot+ PCs from Qualcomm along with Intel and AMD’s equivalent chips as well as Apple’s expected M4-based Macs are expected to drive the premium segment in coming months,” Ubrani said.

One pleasant surprise for analysts was the unexpected strength of its printer division, which ended a streak of 11 straight quarters of declining revenue. It delivered sales of $4.5 billion in the quarter, up 1% from a year earlier and above the Street’s target of $4.2 billion.

Some analysts have said HP’s printing business might be benefiting from the ongoing strife at Xerox Corp., which is currently undergoing a deep restructuring of its business and losing market share due to it. Evercore analyst Amit Daryanani told Yahoo News that Xerox’s printing equipment sales fell by double digits in its most recent quarter, and said HP may be picking up some of that slack.

Lores told analysts on the call that the company is “gaining share” but he cautioned that the printing industry as a whole is still volatile. “We think that the overall print market in 2025 will slightly decline,” he warned. “The decline will be less than what we saw this year, but our goal continues to be to perform better than the market.”

HP will be hopeful that its printing business will also get an AI boost. In September it announced a new feature called Perfect Output, which uses AI algorithms to reformat and reorganize content from web pages to fit on the paper in a way that matches what the user sees on the screen. The tech also works with spreadsheets, which tend to break across pages if columns exceed the page size, ensuring they fit nicely onto the printed page.

Looking to the current quarter, HP forecast earnings of between 57 and 63 cents per share, some way below the Street’s consensus estimate of 72 cents per share. Its full-year earnings forecast of $3.06 to $3.36 also came in some way below the Street’s target of $3.85 per share. According to Lores, the lower guidance is partly the result of the impact of potential tariffs that have been promised by incoming U.S. President Donald Trump.

In what may well be an effort to soften the blow of its weak guidance, HP announced it will increase its quarterly dividend paid out to investors by 5%, to 29 cents per share.

Prior to today’s after-hours movement, HP’s stock had gained abut 30% in the year to date.

Photo: HP