Affected by tariff policies, HP Inc. (HPQ.US) Q2 profit guidance falls short of expectations, plans to lay off over a thousand employees.

HP Inc. (HPQ.US) released its first-quarter performance. In the first quarter ending January 31, revenue increased by 2.4% year-on-year to $13.5 billion, with commercial computer sales rising by 10%, exceeding analyst average estimates of $13.4 billion. By business division, sales in HP Inc.'s personal systems department increased by 5% year-on-year to $9.2 billion. However, printing business declined by 2% year-on-year to $4.3 billion. But due to rising component costs and the impact of tariffs on Chinese goods, the company's profit outlook is lower than expected. The company stated in a statement on Thursday that earnings per share for the period ending April, excluding certain items, will be between 75 cents and 85 cents. Analysts' average estimate is 85 cents. HP Inc. also confirmed its previous expectations for free cash flow in 2025, projecting free cash flow to reach $3.6 billion; HP Inc. also expects full-year earnings per share for the 2025 fiscal year to be between $3.45 and $3.75, with a mid-point of $3.60, higher than the widespread expectation of $3.57. The company's CEO Enrique Lores said in an interview that rising component costs and U.S. tariffs on Chinese imports are impacting profit. However, he added that a diversified supply chain is helping HP Inc. mitigate most of the impact, and by the end of this fiscal year, less than 10% of goods sold in North America from China. Investors have been concerned about the impact of tariffs imposed by President Trump on the computer industry, which heavily relies on imports from overseas manufacturing centers. Like many tech peers, HP Inc. also made donations to Trump's inauguration fund earlier this year. Lores stated that HP Inc. will make some "specific adjustments" in terms of product pricing. HP Inc. will also reduce its workforce from 1,000 to 2,000 employees before the end of this fiscal year, which ends in October. The company stated that this will save an additional $300 million annually. In recent quarters, the long-struggling personal computer market has begun to show signs of recovery. According to industry research firm IDC, shipments of personal computers rose by 1.8% in the fourth quarter of 2024. Earlier this month, HP Inc. announced it will acquire assets of Humane Inc. for $116 million. Humane Inc. is a manufacturer of the wearable AI Pin, launched in late 2023. This is part of HP Inc.'s efforts to provide more generative AI capabilities locally, especially through AI-optimized personal computers.