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(Bloomberg) – HP Inc. shares lost up to 13% after the company warned that sales of its high-margin printer supplies business would decline for the rest of the year, hampering its efforts to increase profitability.
The HP printer supplies business figure will shrink by 3% for the remainder of 2019, driven by weak demand in Europe, the Middle East and Africa, leaders said on Wednesday. of business during a conference call with analysts. Previously, the world's second largest PC maker reported $ 14.7 billion in revenue during the vacation quarter, but Wall Street's forecast of $ 14.9 billion was not expected due to lack of components.
Ink supplies are approximately twice HP's printer sales revenue and contribute to the 16% profit margin of the printing business. Demand has fallen due to prices and higher Internet sales, where HP's market share is lower than that of stores, executives said.
Key ideas
Last year, HP lost its crown of computer sales to Lenovo Group Ltd., but its president and CEO, Dion Weisler, has been striving to make HP more profitable, including selling high end devices and putting more emphasis on subscription offers. The company's PC division recorded its highest profit margin since 2012 in the first fiscal quarter, said CFO Steve Fieler. The 1.3% revenue gain over the period ending Jan. 31 "was disappointing because it would have been higher. " Weisler said in an interview that component shortages were not restricting supply. Shortages of chip maker Intel Corp will be a problem for HP's supply during the first half of the year, he added. Earnings, excluding certain items, will be 50 cents to 53 cents in the second quarter of the year, compared with an estimate of 52 cents by analysts, according to Bloomberg data.
Market reaction
HP shares fell more than 12% in extended trading at 18:20. in New York after closing at $ 23.85. The title had gained 17% this year until closing.
Know more
For more details on the results, click here. Read the statement here.
(Updates with details on the prospects of the printing supplies.)
To contact the reporter about this story: Nico Grant in San Francisco at [email protected]
To contact the editors in charge of this story: Jillian Ward at [email protected], Andrew Pollack, Alistair Barr
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