HP earnings in line with expectations, CEO says tariffs would hurt consumer

All eyes are on AI PC demand and rates for HP Inc. (HPQ) CEO Enrique Lores looking ahead to 2025.

“Some of that [cost of potential tariffs] We will have to address consumers given the global margin we have in the categories. But again, we have to wait and see what the final rates are so we can define what the exact plan will be,” Lores told Yahoo Finance on Tuesday (video above).

The pricing comments to consumers echo some of those Best Buy CEO Corie Barry made today in her call with reporters.

Lores said he looks forward to working with the incoming Trump administration and prefers fluid trade relations between countries.

“We are a global company that does business in many parts of the world, develops in many parts of the world and manufactures in many parts of the world. So for us, an easy way to trade between countries is the preferred option,” Lores added.

Read more: How do tariffs work and who really pays them?

As tariff talk roiled markets, HP posted mixed fiscal fourth-quarter sales results after the market closed.

Consumer PC sales fell 4% in the quarter, while commercial sales improved 5%. Operating margins in the PC division fell sharply year over year.

As in the previous quarter, business customers are upgrading their computers before Microsoft (MSFT) ends support for Windows 10 in October 2025.

Consumer PCs are under slight pressure as people wait for new AI computer releases and spend more money on experiences.

Global shipments of traditional PCs in the third quarter of the calendar year reached 68.8 million, down 2.4% year over year, according to IDC data. Sales were affected by rising costs and inventory replenishment in the previous quarter, IDC explained.

• Net sales: $14.1 billion (+1.7% YoY) vs. $13.9 billion estimate

• Sale of personal systems: $9.6 billion (+2% YoY) vs. $9.7 billion estimate

• Print sales: $4.5 billion (+1% YoY) vs. $4.2 billion estimate

• Diluted earnings per share (EPS): $0.93 (+3% year over year) vs. estimate of $0.93 (guidance: $0.89-$0.99)

• Weak margins: Quarterly operating margins fell to 8.5% from 9% a year ago.

• Fiscal First Quarter EPS Guidance: From $0.70 to $0.76 vs. $0.86 estimate

• EPS guide for the entire year: $3.45 to $3.75 vs. $3.60 estimate

The story continues

“Demand for PCs is certainly back among consumers and business buyers,” said IDC research director Jitesh Ubrani. “However, much of the demand was still concentrated at the entry level thanks to the recovering economy and back-to-school season in North America. That said, new AI-enabled PCs, such as Qualcomm’s Copilot+, along with equivalents from Intel and AMD chips, as well as Apple’s long-awaited M4-based Macs, are expected to drive the premium segment in the coming months.”

Where HP surprised favorably for the first time in a long time was in its printing business.

Print sales increased 1% from a year ago and exceeded expectations. The upside could come from the struggles of rival Xerox (XRX), which is right in the middle of a deep restructuring that professionals say is leading to a loss of market share.

“In printing, results from peers such as Xerox were below expectations, and Xerox’s printing equipment sales declined by double digits year over year due in part to an increase in competitive activity in certain markets,” Evercore ISI analyst Amit Daryanani said in a client interview. note.

Lores said HP is “gaining share” in the printing business, although he declined to criticize Xerox and warned that the industry remains volatile.

“We believe the overall printing market in 2025 will decline slightly. The decline will be smaller than what we saw this year, but our goal is still to outperform the market,” Lores said.

Brian Sozzi is the executive editor of Yahoo Finance. Follow Sozzi on X @BrianSozzi and continue LinkedIn. Advice on deals, mergers, activist situations or anything else? Send an email to brian.sozzi@yahoofinance.com.

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