HPQ.US Q2 profit guidance falls short of expectations, plans to lay off over 1,000 employees due to tariff policy.

Intelligible Finance learned that HP Inc. (HPQ.US) reported its first-quarter earnings. Revenue in the first quarter, which ended on January 31, rose 2.4% year-on-year to US$13.5 billion, with commercial PC sales up 10%, topping analysts' average estimate of US$13.4 billion. By business, the HP Personal Systems Group's revenue rose 5% year-on-year to US$9.2 billion. However, its printing business fell 2% year-on-year to US$4.3 billion. However, the company's profit outlook was below expectations due to the rising component costs and the impact of tariffs on Chinese goods. In a statement on Thursday, the company said that its earnings per share, excluding some items, would be US$0.75 to US$0.85 in the period ending in April. Analysts' average estimate was US$0.85. HP also confirmed its previous expectation for free cash flow in 2025, which is expected to be as high as US$3.6 billion; the company also expects its full-year earnings per share in 2025 to be between US$3.45 and US$3.75, with a midpoint of US$3.60, topping the consensus of US$3.57. Enrique Lores, the company's CEO, said in an interview that the rising component costs and tariffs on Chinese imports were affecting profits. However, he added that a diversified supply chain was helping HP mitigate most of the impact, with less than 10% of goods sold in North America coming from China by the end of this fiscal year. Investors have been concerned about the impact of President Trump's planned tariffs on the computer industry, which is highly dependent on imports from overseas manufacturing hubs. Like many tech peers, HP had donated to Trump's inauguration fund earlier this year. Lores said that HP would make some "specific adjustments" to product pricing. HP will also cut its workforce to 2,000 from 10,000 before the end of this fiscal year, which ends in October. The company said this would save an additional US$300 million per year. The long-stagnant personal computer market began to recover in recent quarters. According to industry research firm IDC, shipments of PCs rose 1.8% in the fourth quarter of 2024. Earlier this month, HP announced that it would acquire the assets of Humane Inc. for US$116 million. Humane is the manufacturer of wearable Ai Pin, which was launched at the end of 2023. This is part of HP's efforts to provide more generative AI features locally, especially through AI-optimized PCs.