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HP Stock Slumps On Continued Weak PC, Printer Sales Outlook

HP Inc. ( HPQ ) stock tumbled on Thursday, a day after the PC and printer maker reported in-line sales and earnings for its fiscal first quarter but signaled more challenges ahead. Shares were down more than 4%, near 10.30, in midday trading on the stock market today . At least four Wall Street analysts cut their price targets on HP stock after the company posted results. In response to continued sluggish PC and printer sales, HP management decided to accelerate its corporate restructuring actions. The Palo Alto, Calif.-based company expects to cut 3,000 jobs this year instead of over a three-year period as originally planned. “We believe that management is taking the necessary steps to right-size its expenses and develop new products to drive profitable share gains,” Deutsche Bank analyst Sherri Scribner said in a research report. She maintained her buy rating on HP stock but cut her price target to 13 from 16. BMO Capital Markets analyst Thanos Moschopoulos reiterated his market perform rating on HP stock but cut his price target to 12 from 13. “We believe the tough road ahead will persist as PC and printer markets continue to shrink,” he said in a report. For its fiscal Q1 ended Jan. 31 , HP earned 36 cents a share excluding items on sales of $12.2 billion, in line with forecasts. On a year-over-year basis, EPS and sales each dropped 12%. On a constant currency basis, factoring out foreign-exchange impact, sales slid 5%. For the current quarter, HP expects non-GAAP earnings per share of 35 to 40 cents. Analysts polled by Thomson Reuters had been modeling 39 cents, on sales of $11.9 billion. HP did not give a Q2 sales forecast. HP also reiterated its fiscal 2016 EPS guidance of $1.59 to $1.69 on a non-GAAP basis. Analysts had been targeting $1.60. Sterne Agee CRT analyst Rob Cihra said HP could have a tough time making its full-year EPS target unless it buys back more stock than planned. He rates HP as neutral, with a price target of 11. New HP Printers Unlikely To ‘Move Needle’ The PC market is a cyclical business at best and is in secular decline at worst, Cihra said. Meanwhile, the company’s cash-cow printing business is facing declining sales in both hardware and ink supplies. New printing ventures like commercial A3 copiers/printers and 3D printers are unlikely “to move the needle anytime soon,” Cihra said. PCs accounted for 62% of HP’s revenue in Q1, and printing brought in the remaining 38%. Printing accounted for 77% of operating profit, with PCs contributing 23% of the total. Personal computer revenue fell 13% year over year in Q1, while printing revenue dropped 17%. On a constant currency basis, PC revenue fell 6%, and printer revenue tumbled 11%. Printing supplies revenue dropped 14%, or down 8% in constant currency. “Fundamentals in the PC and printing industries continue to erode,” Pacific Crest Securities analyst Brent Bracelin said in a report. “The pace of erosion in the printing segment, which represents 77% of profits, (is) problematic relative to expectations for profits to rebound in the second half. Until printing stabilizes, HPQ shares could remain at depressed levels.” “We operate in mature markets,” HP CEO Dion Weisler said on a conference call with analysts. “This is an environment where we know how to win, gain share and out-execute our competitors.”

HP Matches Wall Street Targets For Q1, Misses On Q2 EPS View

Personal computer and printer maker HP Inc. ( HPQ ) late Wednesday delivered in-line sales and earnings for its fiscal first quarter of 2016, but the midpoint of its EPS guidance for fiscal Q2 was below Wall Street’s target. HP stock rose a fraction in after-hours trading following the earnings news release. During the regular session Wednesday, HP climbed nearly 5% to 10.82. HP earned 36 cents a share excluding items on sales of $12.2 billion in the quarter ended Jan. 31. On a year-over-year basis, EPS and sales each dropped 12%. On a constant currency basis, factoring out foreign exchange impact, sales slid 5%. For the current quarter, HP expects non-GAAP earnings per share of 35 to 40 cents, or 37.5 cents at the midpoint. Analysts polled by Thomson Reuters had been modeling for HP to earn 39 cents a share ex items on sales of $11.94 billion in its fiscal second quarter. HP did not give a Q2 sales forecast. HP also reiterated its fiscal 2016 EPS guidance of $1.59 to $1.69 on a non-GAAP basis. Analysts have been targeting $1.60 EPS for the full year. PC and printer sales are mired in a prolonged slump. HP is the No. 2 maker of PCs worldwide with 19.9% market share by unit shipments in the fourth quarter, according to research firm IDC. Lenovo is No. 1 with 21.4% market share, IDC says. “We have a clear strategy that leverages our strengths, and we are focused on execution, taking cost out of the business and delivering innovations that will amaze our customers and partners,” HP CEO Dion Weisler said in a statement . “Although we have some tough quarters ahead, I am confident in the future.”  

PC Market Slump Drags On HP Ahead Of Fiscal Q1 Report

Personal computer and printer maker HP Inc. ( HPQ ) continues to slump on diminished prospects for the PC market in 2016. HP stock on Thursday fell to its lowest level since it split from the former Hewlett-Packard on Nov. 1. HP shares were down 3% near 9 in afternoon trading on the stock market today . Earlier in the session, the stock fell as low as 8.92. HP had climbed as high as 14.82 post-split. RBC Capital Markets analyst Amit Daryanani on Thursday maintained his sector perform rating on HP stock but cut his price target to 11 from 13. He also lowered his estimates for HP’s fiscal 2016 “to reflect weaker market fundamentals.” “Recent PC-centric data points suggest to us that not just demand is soft, but there is also a continued PC inventory overhang, especially in Europe, that could negatively impact results in first half 2016,” Daryanani said in a report. “Similarly, we think both the print hardware and supplies businesses could have muted outlooks for fiscal 2016, based on Canon ( CAJ ) results/outlook and (foreign-exchange) movement.” HP is scheduled to report fiscal-first-quarter results after the market close on Feb. 24. HP executives have said the PC market will be challenging for several quarters but had expressed optimism for the second half of 2016. They had hoped Microsoft ’s ( MSFT ) Windows 10 operating system would help drive PC sales, particularly with enterprise customers, later in the year. “HP should see challenging growth dynamics through fiscal 2016 on foreign-currency translation headwinds, competitive industry pricing, and PC channel inventory issues,” Daryanani said. On Wednesday, Sterne Agee CRT analyst Rob Cihra reiterated his neutral rating on HP stock but cut his price target to 11 from 14. “While global PC demand remains weak and supply/demand negative starting calendar 2016, we actually believe HP’s PC inventories are in better shape than most, an ironic product of its weaker share in China,” Cihra said in a report. “But we still see a particularly weak start to the year.” Cihra is forecasting the PC market will unit declines of about 5% year over year in 2016, but HP could offset the industry decline through market share gains as the top-tier players continue to consolidate. The cash-cow printing business looks even weaker than PCs this year, Cihra said. On Tuesday, Pacific Crest Securities analyst Brent Bracelin maintained his sector weight rating on HP stock but lowered his estimates for HP for this year and next based on “eroding PC and printing fundamentals.” RELATED: Apple Bucks Declining PC Sales Trend HP Inc. Q4 Earnings Exposes Dark Side Of PC business .