HP Inc. ( HPQ ) printed an earnings miss for its most recent quarter, but its CEO says the tech giant is poised to put out better results as AI PCs ramp up and the company cuts costs.
CEO Enrique Lores told me on Yahoo Finance the company will be more "aggressive" with cost cuts to improve profits, mostly in the printing business. The cost cuts are part of a $1.6 billion plan hatched nearly a year ago.
The company's fiscal third quarter sales were mixed.
Sales of consumer PCs fell 1% in the quarter, while commercial sales improved 8%. Sales for the PC division overall rose 5%.
Similar to the previous quarter, commercial clients are upgrading their computers ahead of Microsoft ( MSFT ) ending support for Windows 10 in October 2025.
Second quarter worldwide shipments of traditional PCs hit 64.9 million, up 3% year over year according to data from IDC. It marked the second quarter of growth following eight straight quarters of declines. China was the lone weak spot, IDC said.
"Make no mistake, the PC market just like other technology markets faces challenges in the near term due to maturity and headwinds," said IDC group vice president of worldwide device trackers Ryan Reith.
Where HP continues to have challenges is in its printing business amid stiff price competition and shifts in the marketplace, such as more people working from home rather than an office.
Printing sales dropped 3% year over year. Consumer printing sales increased 2%, while commercial fell 5%.
Operating margins for the printing segment declined to 17.3% from 19% a year ago and were the main culprit in earnings falling shy of Wall Street estimates.
HP's results follow weak earnings and cautious guidance from printing rival Xerox ( XRX ).
"Demand for laser and inkjet printers remain muted (particularly in China + Europe), and that has negative read-throughs to HP’s home printing and supplies business," said Evercore ISI analyst Amit Daryanani. "We also note aggressive pricing from peers (taking advantage of a weaker Yen) presents competitive headwinds for HP."
HP shares fell 3% in after-hours trading.
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Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on X @BrianSozzi and on LinkedIn