HP Inc Beats Estimates, Raises PC Demand Forecast

HP Inc. beat analysts’ revenue estimates and raised profit forecasts on strong sales of higher-end products in a stagnating industry.

The world’s largest personal-computer maker reported better-than-expected quarterly revenue and raised its full-year profit forecast on Tuesday, helped by strong demand for its notebooks and desktops.

Revenue excluding some items may reach 49 cents to 52 cents a share in the current quarter, according to a statement Tuesday, mostly higher than the average analyst projection of 49 cents.

HP also raised adjusted profit estimates for the 2018 fiscal year, to a range of $1.97 to $2.02 a share. The previous range was $1.90 to $2, and analysts were looking for $1.97.

Under Chief Executive Officer Dion Weisler, HP has surprised Wall Street and the technology industry with consistent growth in the midst of waning demand for PCs.

The company has gained market share with more-desirable, higher-end computers, including gaming machines that can be more profitable. The printer business also helped power HP’s profit, as the company sells more-expensive devices to corporate clients after integrating Samsung Electronics Co.’s unit.

“Our reinvention strategy is paying off well,” Weisler said in a phone briefing. “We have double-digit revenue growth, double-digit growth in earnings per share and nearly a billion dollars in free cash flow.”

Shares of HP Inc., made out of the 2015 split of Hewlett-Packard Co, were slightly up in extended trading.

Earnings Recap, PC Demand

HP Inc.’s personal systems business, which includes notebooks and desktops and accounts for more than 60 percent of total revenue, rose 14.5 percent to $8.76 billion in the second quarter. Analysts on average had expected $8.28 billion.

The Palo Alto, California-based company had the top position in worldwide PC shipments in the first calendar quarter of 2018 with a 22.6 percent market share, according to research firm International Data Corp’s (IDC) data.

IDC analysts have said demand for premium notebooks in both the consumer and commercial segments have helped major PC vendors to retain better margins and garner buyer interest.

HP Inc., which completed the acquisition of Samsung Electronics Co’s printer business last year, said revenue from its printing business rose 10.9 percent to $5.24 billion, above analysts’ estimate of $5.13 billion.

Net earnings jumped 89.3 percent to $1.06 billion, or 64 cents per share, in the quarter ended April 30, mostly helped by a one-time tax benefit of $975 million.

Excluding items, the company earned 48 cents per share, in line with Wall Street estimates.

Revenue rose 13.1 percent to $14 billion, above analysts’ average estimate of $13.57 billion.

New Faces

The company also named Steve Fieler as its chief financial officer, succeeding 32-year HP veteran Cathie Lesjak.

Fieler, whose appointment is effective July 1, currently leads HP Inc’s treasury and corporate finance functions. Lesjak will step into the role of interim chief operating officer.

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