HP gives lower Q1 profit forecast on PC slump

Newly formed Hewlett-Packard Enterprise Chief Executive Officer (CEO) Meg Whitman speaks during a press conference in New York on November 2, 2015. Hewlett Packard officially split into two companies on November 2 with Hewlett-Packard Enterprise focused on businesses and HP, Inc, focused on consumers. AFP PHOTO/JEWEL SAMAD

SAN FRANCISCO: HP Inc gave a disappointing forecast for profit in its first quarter as a stand-alone company, hurt by its dependence on the lacklustre market for personal computers and printers after splitting up with its corporate-technology counterpart.

On a conference call yesterday following Hewlett-Packard Co’s final earnings report as one company, HP Inc. executives said the PC industry is tougher than anticipated. The former PC and printer units were separated this month from the divisions that sell equipment, services, and software to businesses, now known as Hewlett Packard Enterprise Co.

HPE’s quarterly profit forecast also fell short of analysts’ estimates, yet executives struck a more positive tone, pointing to revenue growth minus the impact of currency fluctuations.

Meg Whitman (pic), who became chief executive officer of HPE in the split and is chairman of HP Inc, has advocated for the separation by touting the opportunities that independence offers each company, saying they can be more nimble and responsive to customers as the technology landscape changes. While that bet may pay off, it also shines a bright light on the struggles HP Inc. faces in the shrinking PC market, even as HPE scouts out new areas for growth.

“This is the first snapshot of, ‘OK, is she on the right path?”’ said Jeffrey Fidacaro, an analyst at Monness Crespi Hardt & Co. “Take HP Enterprise - that’s where a lot more of the risk and a lot more of the transformation needs to take place.”

For the fiscal first quarter, which ends in January, HP Inc expects profit excluding certain costs to be 33 cents to 38 cents per share - falling short of the average analyst estimate for 42 cents, according to data compiled by Bloomberg.

HPE profit will be 37 cents to 41 cents a share, the company said in a statement, compared with an average projection for 44 cents.

HPE reaffirmed its forecast for annual profit, before certain items, to be US$1.85 to US$1.95 a share.

Shares of HPE rose 2% in extended trading, after slipping 1.2% to US$13.69 at the close in New York. — Bloomberg