HP Revenue Seen Improving as PC Market Stabilizes -- Earnings Preview
May 24 2017 - 5:59AM
Dow Jones News
By Rachael King
HP Inc. is scheduled to report fiscal second-quarter results on
Wednesday. Here is what you need to know:
EARNINGS FORECAST: Analysts on average expect adjusted earnings
of 39 cents a share for the period ended in April, according to
Thomson Reuters, narrower than the 41 cents a share reported in the
year-earlier period.
REVENUE FORECAST: Wall Street analysts expect revenue of $11.93
billion, up from $11.59 billion reported a year ago.
WHAT TO WATCH
PC REBOOT: As the personal-computer market stabilizes, HP is
gaining market share at a faster clip than rival Lenovo Group Ltd.
The two companies were neck-and-neck in market share in the first
quarter, with Lenovo in first place at 19.9% and HP at 19.5%,
according to research firm Gartner. But HP's shipments grew 6.5% in
the quarter from a year earlier, compared with Lenovo's 1.2%
growth. HP has said revenue has improved through increased sales of
premium products such as gaming PCs and laptops that convert into
tablets. Investors will be watching to see if this trend
continues.
SUPPLY SHIFT: HP's largest source of profit is the ink and toner
that printers use. Supplies declined 16% in 2016 compared with the
previous year. A printing supplies glut that began in late 2015
could be nearing an end. Some analysts say conditions are starting
to improve, and they will be looking to see whether this is the
case.
COMPONENT COST: The PC industry is facing price increases for
components in personal systems including memory, batteries and
LCDs. HP has addressed this price hike by stocking up on components
when they become available, Chief Financial Officer Catherine
Lesjak said in February during a call with investors. It can take
time to change factory output levels of memory, for example. Those
commodities have been under pressure because the mobile-phone
market is increasing demand for memory. Analysts will be looking to
see how much component prices affect gross margins.
Write to Rachael King at rachael.king@wsj.com
(END) Dow Jones Newswires
May 24, 2017 05:44 ET (09:44 GMT)
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