HP Inc. plummets after hours! Full-year profit expectations cut as tariff costs and economic weakness become double burdens

According to Zhitong Finance APP, HP Inc. (HPQ.US) fell about 15% in after-hours trading, after the company announced a profit outlook that fell short of expectations and lowered its full-year earnings forecast, citing the ongoing cost impact of a weak economy and U.S. tariffs on Chinese goods. As of the time of writing, HP was down 11.47% in after-hours trading, priced at $24.08.

The financial report showed that HP's revenue for the second fiscal quarter ending April 30 was $13.2 billion, a year-on-year increase of 3.1%, exceeding market expectations; earnings per share were 71 cents, while the average expectation was 81 cents.

The company stated that for the third fiscal quarter ending in July, the earnings per share, excluding certain items, would be between 68 to 80 cents. The average analyst expectation was 91 cents. Chief Financial Officer Karen Parkhill indicated that tariff-related impacts and expenses from moving production out of China reduced earnings per share by 12 cents.

CEO Enrique Lores stated in an interview that the rising economic uncertainty related to tariffs is harming computer demand, with the impact being greater than the company had anticipated when it released earlier forecasts. The company is increasing production in Vietnam, Thailand, India, Mexico, and the United States.

He noted that by the end of June, nearly all products sold in North America would be produced outside of China. However, due to the economic slowdown, the growth rate of the personal computer market will be more moderate.

HP has lowered its full-year adjusted earnings per share forecast from the previous range of $3.45 to $3.75 to $3.00 to $3.30, significantly below the expected $3.56 per share.

Lores stated, "Clearly, the current economic environment is very different from February, and consumer and some business confidence has noticeably changed." He added that, in addition to the weak economy, price increases across the industry are also harming demand. "We believe caution is important."

The long-depressed personal computer market has begun to recover in recent quarters, but tariffs are hindering this process.

Industry research firm IDC reported that personal computer shipments grew by 4.9% in the March quarter. The market research company indicated that part of this may be due to customers purchasing ahead of the tariffs announced by President Trump on April 2.

HP's personal systems business, which includes personal computers, saw revenue growth of 7%, reaching $9 billion. The average analyst expectation was $8.8 billion.

Lores stated that HP saw "quite a small" impact from customers purchasing ahead.

He added, "We expect to fully offset the trade-related cost increases by the fourth quarter."