By Jaspreet Singh Feb 24 (Reuters) - HP Inc said it now expects fiscal 2026 results to be at the low end of its forecasts, as the personal computer maker grapples with U.S. trade regulations and
HP Predicts Ongoing Memory Chip Issues and Decline in PC Sales
By Jaspreet Singh
Feb 24 (Reuters) - HP Inc said on Tuesday it expected volatility in memory chips to persist even into next year and forecast a slump in its PC shipments, sending its shares down around 6% in extended trading.
Financial Outlook and Market Challenges
The personal devices maker said it expects adjusted profit for fiscal 2026 ending October 31 to be at the low end of its previously issued forecast of $2.90 to $3.20 per share. It anticipates PC unit shipments to decline in the double digits, in line with industry trends.
HP, like its rivals such as Dell, is dealing with increased costs as a shortage of memory chips has gripped the tech industry, fueled by massive AI data center buildouts that are sucking up capacity. The company said on Tuesday it has taken steps to mitigate this, including adjusting its supply chain and raising prices to offset the impact of U.S. President Donald Trump's sweeping tariffs.
"With just one quarter behind us in a dynamic environment marked by increasing memory costs, we are holding our outlook for the year, yet currently anticipate results to be closer to the low end of our range," HP finance chief Karen Parkhill said in a statement.
Positive Trends in European and Asian Markets
The company, however, struck a positive note on demand from Europe and Asia, driven by the ongoing Windows 11 upgrade cycle, and said its average selling prices got a boost from a shift towards commercial and consumer premium devices. HP also observed a "moderate amount of customer demand pull-in" in the first quarter, especially in its consumer business, which grew 16%.
This, and a growing adoption of AI-powered PCs, helped it beat analysts' estimates for first-quarter revenue and profit.
AI PCs constituted more than 35% of the company's total PC shipments in the first quarter, up from 30% in the previous quarter, the company said.
Impact of Tariffs on Business Operations
HP said it was evaluating Trump's new tariff announcements, but did not expect these levies to immediately hurt its business. It will continue "engaging the administration on these matters and others," interim CEO Bruce Broussard said on a conference call with analysts.
The U.S. began collecting a temporary new 10% global import tariff on Tuesday, but the Trump administration was working to increase it to 15%, a White House official said, sowing confusion over the tariff policies after last week's Supreme Court defeat.
The company's first-quarter revenue rose 6.9% to $14.44 billion, beating estimates of $13.94 billion, according to data compiled by LSEG. Its adjusted profit per share of 81 cents for the quarter ended January 31 exceeded estimates of 76 cents.
Revenue for the personal systems unit, which houses both consumer and commercial PCs, grew 11% to $10.25 billion in the quarter. Revenue in its printing segment, which includes office-oriented printers and service offerings, fell 2% to $4.19 billion.
It forecast second-quarter adjusted profit per share between 70 cents and 76 cents, compared with estimates of 74 cents.
(Reporting by Jaspreet Singh in Bengaluru and Juby Babu in Mexico City; Editing by Maju Samuel, Sayantani Ghosh and Alan Barona)
