HP beats expectations, CEO sees no ‘major downturn’ in economy

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HP CEO Enrique Lores said nothing in his company’s latest quarterly figures suggesting economic growth is about to fall off a cliff this year.

HP beat analysts’ profit forecasts for its fiscal second quarter, driven by strong business PC sales as customers continue to bring workers back to the office. HP said sales of commercial computers rose 18% in its latest quarter.

“What we’re seeing today continues to be very strong demand on the trading side,” Lores told Yahoo Finance Live. “As we expected, we saw some slowdown in consumption. But nothing tells us that it will be a major slowdown in the future.”

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Lores’ comments come as investors and executives are showing some caution about the economy’s growth outlook, although experts have begun to call some of those recession fears “overblown.”

HP’s bottom line was also boosted by $1 billion in share buybacks.

Here’s how HP performed against Wall Street estimates in its second fiscal quarter:

The strength of commercial PCs is accompanied by more mixed trends elsewhere in HP’s portfolio. Sales of consumer computers and printers fell 6% and 12%, respectively, from a year earlier. Commercial printer sales fell 4%.

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Operating profit margins contracted 90 basis points in HP’s personal systems segment, but increased 110 basis points in the printing business.

The company raised its outlook for the full year despite continued supply chain constraints and a slowing PC market.

For the third fiscal quarter, HP sees EPS in a range of $1.03 to $1.08. Analysts had estimated earnings of $1.04 per share in the current quarter.

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The company also raised its full-year earnings outlook to $4.24-$4.38 per share from $4.18-$4.38 previously. Wall Street had modeled annual earnings of $4.26 per share.

“I think consistency is the key message,” Lores added.

Brian Sozzi is editor-in-chief and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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