The PC has not yet recovered, and HP's Q1 revenue is lower than expected.

HP (HPQ.US) released its performance for the first quarter of the 2024 fiscal year ending January 31. Due to the continued sluggish sales of personal computers, HP's quarterly revenue fell below expectations. The financial report shows that Q1 revenue was $13.2 billion, a decrease of 4.6% year-on-year, $390 million lower than analysts' expectations. Earnings per share were $0.81, in line with analysts' expectations. The poor performance came from the company's personal computer business. Analysts had expected sales to increase this quarter after two consecutive years of declining revenue in HP's consumer personal computer department. The company said in a statement on Wednesday that consumer sales fell by 1% to $2.76 billion, while commercial personal computer revenue declined by 5% to $6.05 billion; neither department's performance met expectations. Overall, personal system revenue fell by 4% year-on-year to $8.8 billion, and printing revenue fell by 5% to $4.4 billion, in line with expectations. However, HP CEO Enrique Lores said in an interview that the company expects personal computer sales to increase in 2024. He also said that this will be driven by a rebound in corporate spending, new computers installed with Microsoft (MSFT.US) Windows 11 software, and the moderate impact of personal computers supporting artificial intelligence. Lores stated that HP repurchased about $500 million worth of stock in the second quarter and will continue to buy back shares this year. The company expects earnings per share in the second quarter to be between $0.76 and $0.86, matching expectations of $0.82. For the 2024 fiscal year, HP expects free cash flow to be between $3.1 billion and $3.6 billion, down from the previous estimate of $3.39 billion; adjusted earnings are expected to be between $3.25 and $3.65 per share. Research firm IDC wrote in a report last month that the personal computer market has experienced an "unprecedented" downturn in recent years, with holiday season shipments at their lowest levels since 2006. However, IDC also predicts that, as the "contraction seems to have bottomed out", growth will eventually resume this year. After the news was released, HP fell by 3.45% in after-hours trading in the US stock market, to $27.73.