(Bloomberg) -- HP Inc. gave an outlook for profit in the current quarter that fell short of estimates, suggesting a setback in the personal computer market’s recovery from a yearslong slump.
Earnings, excluding some items, will be 70 cents to 76 cents a share in the fiscal first quarter, the company said Tuesday in a statement. Analysts, on average, projected 86 cents in the period ending in January, according to data compiled by Bloomberg. For the fiscal year, profit will be $3.45 to $3.75 a share, compared with an average estimate of $3.60.
An increase in component costs, rather than any issues with demand, is hurting profitability, Chief Executive Officer Enrique Lores said in an interview. Prices of parts should decline as the year goes on, he added.
The shares fell about 6% in extended trading after closing at $39.10 in New York. The stock had jumped 30% this year through the close.
The PC market had seen a historic decline in recent years after many consumers, businesses and schools purchased laptops in the early months of the pandemic. While signs of a rebound began to materialize this year, shipments again dipped in the third quarter, industry analyst firm IDC said in October.
PC makers had hoped that new machines touted as better for artificial intelligence workloads would spur demand. But “buyers have yet to see clear benefits or business value,” Mikako Kitagawa, an analyst at Gartner Inc., said in report last month.
For the fiscal fourth quarter, HP reported sales increased 1.7% to $14.1 billion, just ahead of analyst expectations. It marked the company’s second consecutive period of year-over-year revenue growth after eight straight quarters of declines. Profit, excluding some items, was 93 cents per share, in line with estimates.
HP’s personal computer business reported revenue rose 2% to $9.59 billion, missing the average estimate of $9.74 billion. This was due to a smaller-than-expected boost in sales of computers to business. The release of Microsoft Corp.’s new edition of Windows hasn’t fueled PC demand as quickly as in previous releases, Lores said.
HP’s printing segment grew 1% to $4.5 billion, the first expansion for the business since late 2021. Analysts, on average, predicted a decline of almost 4%.