HP Inc. (HPQ) reported a decline in earnings last quarter, but the CEO says the tech giant is positioned to deliver better results as AI PCs become more widely adopted and the company cuts costs.

CEO Enrique Lores told me on Yahoo Finance that the company will be “more aggressive” in cutting costs to boost profits, particularly in the printing business. The cost-cutting is part of a $1.6 billion plan hatched nearly a year ago.

The company’s sales in the third fiscal quarter were mixed.

Consumer PC sales fell 1% during the quarter, while commercial sales rose 8%. Overall PC sales rose 5%.

Similar to the previous quarter, commercial customers are upgrading their computers before Microsoft (MSFT) ends support for Windows 10 in October 2025.

According to IDC data, 64.9 million traditional PCs were shipped worldwide in the second quarter, up 3% year-on-year. This was the second quarter of growth after eight quarters of declines. China was the only weak spot, according to IDC.

“Make no mistake, the PC market, like other technology markets, faces challenges in the near future due to maturity and headwinds,” said Ryan Reith, group vice president of Worldwide Device Trackers at IDC.

HP continues to face challenges in the printer business. Price competition is tough and market changes are occurring, for example because more and more people are working from home instead of the office.

Printing revenues fell 3% year-on-year. Consumer revenues rose 2%, while commercial revenues fell 5%.

Operating margins in the printing segment fell to 17.3 percent from 19 percent a year earlier and were the main reason why profits fell short of Wall Street estimates.

HP’s results follow weak earnings and cautious forecasts from printing rival Xerox (XRX).

“Demand for laser and inkjet printers remains subdued (especially in China and Europe), and this is negatively impacting HP’s home printer and supplies business,” said Evercore ISI analyst Amit Daryanani. “We also note that aggressive pricing by competitors (taking advantage of the weaker yen) is putting HP at a competitive disadvantage.”

The results overview

• Net sales: $13.5 billion (+2.4% year-on-year) versus estimate of $13.37 billion

• Selling personal systems: USD 9.4 billion (+5% year-on-year) versus estimate of USD 9.1 billion

• Print sales: $4.1 billion (-3% year-on-year) versus estimate of $4.25 billion

• Diluted EPS: $0.83 (-3% y-o-y) vs. $0.86 estimate (forecast: $0.78-0.92)

What else caught our attention

The story continues

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In the following episode of Opening Bid, Jerome Pesenti, former head of artificial intelligence at Meta (META), speaks bluntly about Tesla’s (TSLA) foray into robotics.

Brian Sozzi is editor-in-chief of Yahoo Finance. Follow Sozzi on X @BrianSozzi and further LinkedIn. Tips on deals, mergers, activist situations or other topics? Email [email protected].

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