HP cut its full-year forecast as the PC market recovered less than expected

Hewlett-packard Co., the world's second-largest personal computer maker, cut its full-year profit and cash flow forecast on Aug. 29, citing a slower-than-expected recovery in the PC market.

HP expects full-year free cash flow of $3 billion for the fiscal year ending in October, down from its previous forecast of $3.25 billion. After the full-year adjustment, the earnings per share forecast will be reduced from the original expectation of $3.30 to $3.50 to $3.23 to $3.25.

HP Chief Executive Enrique Lores said demand had "not improved as quickly as we expected". The PC industry now has higher inventories, which means that PC prices are still under pressure. Economic problems in mainland China also hurt sales last quarter as corporate customers cut jobs and retrenched, delaying purchases.

PC sales have experienced an unprecedented decline over the past year after surging during the coronavirus pandemic. HP has been counting on the second half of 2023 to see a rapid improvement in the market, with back-to-school and year-end holiday shopping seasons. HP's consumer PC sales fell 12 percent last quarter, still beating expectations. However, sales to corporate customers fell 11 percent, which was worse than market expectations. Printer unit revenue also fell 7 percent to $4.3 billion, missing the average analyst estimate of $4.57 billion. Bloomberg Industry Research said HP's weak earnings reinforced investor concerns that companies will tighten spending on technology.

However, brands Acer and Asustek are not pessimistic about the second half. Acer president Chien Wai-cheung previously pointed out that there are now expected to be some sporadic orders back, quarter by quarter to positive development, the second half of the operation is cautiously optimistic, can look forward to the third and fourth quarter back-to-school tide and Christmas Christmas demand.

Asustek had previously forecast seasonal demand for PCS in the second half of the year, but full-year demand remained very weak. For the full year, Asustek expects operations in the second half to be better than in the first half and better than in the same period last year.

Founderships, as the urgent order faded, have adjusted the revenue outlook, among them, Inventel estimated that the third quarter performance was flat in the second quarter, Compal also because of the impact of the high base period, is expected to be the third quarter of pen shipments, only compared with the second quarter of low single-digit growth (that is, less than 5 percentage points), the annual pen shipments to maintain an annual decline of 10 to 15% view.

Quanta believes that the base period of the second quarter is high, so that the third quarter of the pen shipments can only be flat or low growth, the fourth quarter even fell 10 to 15%, the second half of the year shipments are similar, the annual shipments may be reduced by 20%, since July there have been foundry shipments began to decline slightly, such as Wistron in July pen shipments of 1.5 million units, The monthly and annual decreases were 11.76% and 11.76% respectively. Supply chain companies believe that if the economic downturn continues, it will affect the pace of recovery of the notebook market.