HP Expects Weaker Profit on China Tariffs, Component Costs

(Bloomberg) — HP Inc. gave a profit outlook for the current quarter that fell short of expectations, citing the impact of rising component costs and tariffs on goods from China.

Most Read from Bloomberg

Earnings, excluding some items, will be 75 cents to 85 cents a share in the period ending in April, the company said Thursday in a statement. Analysts, on average, estimated 85 cents.

Rising component costs and US tariffs on imports from China are weighing on profit, Chief Executive Officer Enrique Lores said in an interview. Still, a diverse supply chain is helping HP mitigate most of the impact, and by the end of the fiscal year less than 10% of goods sold in North America will come from China, he added.

Investors have been concerned about the impact of President Donald Trump’s planned tariffs on the computer industry, which is highly reliant on imports from overseas manufacturing hubs. Like many tech peers, HP contributed to Trump’s inauguration fund earlier this year.

As far as product pricing in response to the tariffs, HP will be making some “specific adjustments,” Lores said.

The shares were little changed in extended trading after closing at $33.13 in New York. The stock has gained 1.5% this year.

In the fiscal first quarter, which ended Jan. 31, revenue increased 2.4% to $13.5 billion, led by a 10% expansion in sales for business computers. That exceeded analysts’ average estimate of about $13.4 billion.

A recovery in the long-ailing personal computer market has started to materialize in recent quarters. Shipments of PCs ticked up 1.8% in the fourth quarter of 2024, according to IDC, an industry research firm.

Earlier this month, HP announced it would acquire assets from Humane Inc., the maker of the wearable Ai Pin introduced in late 2023, for $116 million. It is part of HP’s push to offer more generative AI features locally, especially through AI-optimized PCs.

HP also affirmed its previous guidance for 2025 free cash flow of as much as $3.6 billion and annual adjusted profit of as much as $3.75 per share.