HP's PC sales in Q4 solid, printers take a hit

HP's fourth quarter earnings were in line with estimates, but sales fared better due to strength in the PC business. Printer revenue slipped.
Written by Larry Dignan, Contributor

HP Inc., delivered an in-line fourth quarter that featured a 4 percent PC sales gain from a year ago, as its printing business continued to struggle with revenue falling 8 percent.

The company, which reported at the same time as its other half, Hewlett Packard Enterprise, saw strong gains in its notebook business, with desktops gaining 2 percent in the fourth quarter. HP, however, took a hit on consumer printers and supply revenue.

HP reported fourth quarter earnings of $500 million, or 30 cents a share, on revenue of $12.5 billion, up 2 percent from a year ago. Non-GAAP earnings were 36 cents a share. Wall Street was expecting fourth quarter earnings of 36 cents a share on revenue of $11.9 billion.

For fiscal 2016, HP delivered net income of $2.7 billion, or $1.53 a share, on revenue of $48.2 billion, down 6 percent from a year ago. In a statement, CEO Dion Weisler said the company executed on its strategy to focus on its core.

Patrick Moorhead, principal of Moor Insights & Strategy, gave his take on HP's earnings:

HP Inc. surprised many with their increased revenues driven by PCs during a rough time in both the PC and printer market. HP's premium PC and gaming strategy is starting to kick and and drove a lot of their 4 percent revenue increase for the quarter in a down market. Both consumer and commercial revenues were up, hard to do when you're profitable at 4.3 percent margin. Ink is HP's biggest short-term issue commercial units were up 10 percent and HP needs to get control of the knock-off ink cartridges. I like the printer pipeline driven by page wide array technology that helps them attack the laser market but also 3D printing. I still view HP as the 3D printing leader in 2017.

As for the outlook, HP projected first quarter non-GAAP earnings between 35 cents a share and 38 cents a share. Wall Street was expecting non-GAAP first quarter earnings of 38 cents a share. For fiscal 2017, HP said non-GAP earnings will be between $1.55 a share and $1.65 a share.

The results show that HP's PC business fared better in the fourth quarter than it had for the fiscal year. Here's the breakdown for the fourth quarter. In a nutshell, PCs were solid, and consumer printers and supplies took a hit.

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