HP Projects Profit In Line With Estimates on Cost Cutting

(Bloomberg) -- HP Inc. gave a profit forecast for the current quarter that was in line with Wall Street estimates, signaling the second-largest computer maker’s cost-cutting measures are starting to pay off.

Separately, Chief Executive Officer Dion Weisler is stepping down effective Nov. 1 because of a “family health matter,” the Palo Alto, California-based company said Thursday in a statement. Enrique Lores, president of the imaging, printing and solutions business, will succeed Weisler, who took over as CEO four years ago when HP split from Hewlett Packard Enterprise.

HP projected that profit, excluding some items, will be 55 cents a share to 59 cents a share in the fiscal fourth quarter. Analysts, on average, estimated 58 cents, according to data compiled by Bloomberg.

Weisler has sought to make the company more profitable by reducing expenses, offering more subscription services and selling more expensive computers. The company has been contending with U.S. tariffs on goods made in China, which is an important center for HP’s laptop production. While HP has lost the global personal-computer sales crown to Chinese rival Lenovo Group Ltd., Weisler has said the company is targeting profitable market share rather than competing for the highest volume.

The shares, which have declined 7.6% this year, closed at $18.91 in New York.

Fiscal third-quarter revenue was little changed at $14.6 billion, slightly below analysts’ average projection of $14.61 billion, according to data compiled by Bloomberg. Profit, excluding some items, was 58 cents a share in the period ended July 31, compared with an average estimate of 55 cents.

Sales from HP’s PC division increased 3.1% to $9.69 billion in the fiscal third quarter. Revenues from the print division declined 5.3%, including a 7% drop in printer supplies.

Toni Sacconaghi, an analyst at Sanford C. Bernstein, was expecting a decline of 4% to 5% in revenue from printer supplies. “Weaker supplies growth would likely be viewed negatively, and potentially undermine management’s credibility,” he wrote Thursday in a note to investors ahead of the results.

Global PC shipments increased 1.5% in the period from April through June, fueled by business upgrades of their machines, according to industry analyst Gartner Inc. That rise, however, may have been artificially inflated by a rush to move equipment before threatened tariffs were put in place by the U.S., according to research firm IDC.

--With assistance from Ian King.

To contact the reporter on this story: Nico Grant in San Francisco at ngrant20@bloomberg.net

To contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Andrew Pollack, Alistair Barr

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