HPQ HP Inc

By Jay Greene 

HP Inc., the printer and personal-computer maker born from the 2015 split of Hewlett Packard, is scheduled to report fiscal second-quarter results Tuesday after the market closes. Here is what you need to know:

EARNINGS FORECAST: HP is expected to report adjusted earnings of 48 cents a share, according to an S&P Global Market Intelligence survey of analysts. Adjusted earnings exclude restructuring and acquisition-related charges, among other items. A year before, the company earned $559 million.

REVENUE FORECAST: Analysts expect HP to post revenue of $13.57 billion, up from $12.39 billion the year before.

WHAT TO WATCH:

PC GROWTH: The personal-computer market has been challenged for years, with quarter after quarter of flat to shrinking sales. But HP has managed to grow in that market, largely by taking share from smaller rivals. It did so again in the first three months of the year, with HP's world-wide shipments growing 2.8% even as the market shrank 1.4%, according to the research firm Gartner Inc. Sanford C. Bernstein analyst Toni Sacconaghi noted in a recent report that "the PC market is as strong as it has been in last several years." That has helped HP boost the average selling price for its PCs about 5% over the past five quarters, he wrote. He expects revenue in HP's PC business grew nearly 13% from the year-ago period to $8.62 billion.

PRINTING GAINS: HP's printing business should reap revenue rewards from the company's $1.05 billion acquisition of Samsung Electronics Co.'s printer business, which closed last November. That acquisition is boosting HP's sales in the so-called A3 copier segment, a business that handles larger paper used for posters and photographic prints. RBC Capital Markets analyst Amit Daryanani expects the acquisition to add $1.4 billion to HP revenue in the current fiscal year. While Canon Inc., a large HP supplier, reported flat growth in its office printer business for the first three months of 2018, it forecast increasing demand for the rest of the year. Mr. Daryanani said that forecast "should be a positive" for HP.

SUPPLY CHECK: Supplies are a big part of HP's printing business, generating revenue for the company after it has sold each printer. Three months ago, HP finance chief Cathie Lesjak said she expected revenue from supplies to be "flat to slightly up" in the next fiscal year. Goldman Sachs & Co. analyst Rod Hall expects investors to focus on further guidance to get more clarity from the company given that "somewhat disappointing forecast."

Write to Jay Greene at Jay.Greene@wsj.com

(END) Dow Jones Newswires

May 29, 2018 05:44 ET (09:44 GMT)

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