HP Inc disappoints investors with current-quarter profit forecast as US tariffs rise

HP Inc.’s fiscal year 2025 calendar has already ended in the first quarter, with investors currently wondering how U.S. tariffs will impact the PC giant’s business. The company’s management expects earnings per share to range from $0.75 to $0.85 this quarter, slightly below analysts’ expectations of $0.85.

Image source: HP Inc.

The forecast was shaped by rising costs and the potential for higher tariffs on Chinese goods shipped to the U.S. Donald Trump had already imposed 10% tariffs on Chinese goods in early February and this week said he would increase the tariffs by another 10% starting March 4. HP Inc. executives were quick to say they were restructuring their supply chains so that by the end of October, only 10% of the company’s products shipped to the U.S. would be made in China.

Amid tariff concerns, it went largely unnoticed that the company’s revenue in the last quarter rose 2% to $13.5 billion, beating market expectations. Of that, personal systems accounted for $9.2 billion, up 4.7% year-over-year. Print systems revenue fell 2.4% to $4.3 billion.

The commercial PC segment generated 49% of HP Inc.’s revenue in the last quarter, consumer PCs accounted for 19%, printing supplies provided 21% of revenue, and document printing equipment itself brought in 9% of revenue when sold in the commercial segment and only 2% in the consumer segment. Operating profit was dominated by revenue from supplies of printing supplies (62%), the PC segment was able to claim only the remaining 38% of operating profit, which in total reached $1.3 billion. Sales of supplies remain a more profitable business, since the operating profit margin in the segment reaches 19% versus 5.5% in the PC market.

HP Inc.’s PC business grew mostly in the commercial segment last quarter. It accounted for 72% of the segment’s revenue, grew 6% in units sold, and increased core revenue by 10%. Consumer PCs accounted for 28% of the segment’s revenue, with shipments down 11% and revenue down 7%. Personal systems as a whole contributed $507 million in operating profit last quarter.

In printing systems, 66% of revenue was provided by the sale of consumables, 27% was formed by the sale of printers and MFPs in the corporate segment, and the share of consumer products accounted for no more than 7% of revenue. Formally, the company’s revenue from the sale of consumables even decreased by 1%. In terms of the sale of printing systems, HP Inc.’s revenue in the commercial sector decreased by 7%, and in the consumer sector it grew by 5%. Overall, the company sold 5% more printing systems than a year earlier.

HP Inc. plans to cut 1,000 to 2,000 jobs by the end of the current fiscal year to save about $300 million per year. The PC maker will respond to tariff increases with “specific” price changes for its products, the company’s management said. Demand for new computers will grow more this year than last year, as Windows 10’s support cycle ends in October. Consumer interest in new PC models with local AI acceleration will also fuel demand, but to a lesser extent.