HP beats Q3 expectations with strong PC sales

For the second quarter in a row, HP sees revenue growth in both its PC and printing businesses. HP's PC sales grew last quarter while Lenovo's PC division saw flat sales.

HP Inc. published its third quarter financial results on Wednesday, beating market expectations and posting net revenue gains in both its PC and printing segments.

The company reported non-GAAP diluted net earnings per share of 43 cents on net revenue of $13.1 billion.

Wall Street was looking for earnings of 42 cents per share on revenue on $12.3 billion.

A year prior, the company reported earnings of 48 cents per share on $11.89 billion in revenue.


"Q3 was another outstanding quarter of successfully executing our reinvention strategy," CEO Dion Weisler said in a statement. "We stabilized supplies revenue a quarter earlier than expected, posted double-digit revenue growth, delivered non-GAAP earnings per share at the high end of our previously provided outlook range and generated approximately $1.7 billion in free cash flow."

Personal Systems net revenue in Q3 came to $8.4 billion, up 12 percent year-over-year. Commercial net revenue increased 11 percent while Consumer net revenue increased 14 percent. Total units were up 7 percent, with Notebooks units up 12 percent and Desktops units down 3 percent.

HP has managed to grow its PC business and become the top PC vendor, even as worldwide PC shipments have continued their downward trend. Last week, Lenovo, HP's closest PC competitor posted its most recent quarterly results, showing flat revenues in its PC division.

Meanwhile, HP's Q3 printing net revenue was $4.7 billion, up 6 percent year-over-year.

This marks the second quarter in a row HP has seen growth in both its PC and printing businesses. Q2 was the first time in seven years that revenue from both PC and printer sales increased over the same quarter.

Analyst Patrick Moorhead, founder of Moor Insights & Strategy, said in a statement that HP had a "tremendous quarter" all around but particularly in the PC market.

"The biggest surprise came from the PC group who racked up 12% YoY growth, their third quarter of doing that," he said in a statement. "I believe that HP is taking PC market share from some of the top four PC players, not just smaller players."

Notebooks were up 16%, Moorhead noted, attributing that to HP's revitalized Spectre, ENVY and EliteBook lines.

"All of this PC growth came during a supply-constrained storage situation, which made the growth all that challenging," he said. "The printer group did well, too, and based on my calculations, the company is ahead of schedule in balancing the printer cartridge supply."