HP beats expectations, but Apple is lagging behind Apple

HP beats expectations, but Apple is lagging behind Apple

With several cost-cutting efforts, HP Inc. HPQ managed to overcome another steep drop in PC sales as it delivered better than anticipated quarterly results. Dell Technologies Inc DELL, HP's competitor, also crushed estimates with its latest quarter thanks to its cost management execution, but unlike HP, it wasn t as optimistic with its guidance. overall, this was a pleasant surprise from PC manufacturers, as back in April, even themighty Apple Inc AAPL reported that its Mac shipments tanked 40.5% during the first quarter of the year. Apple saw the biggest drop, but all but Asus and Lenovo saw shipments drop and weakened demand.

For the quarter ended April 30th, HP saw its revenue take a 22% YoY plunge as it amounted to $12.9 billion. Despite earnings of $1.07 billion and 80 cents per share, the company's net earnings amounted to $1.07 billion, or 80 cents a share, from $1 billion, or 95 cents a share. When restructuring expenses and other charges are taken aside, HP earned $1.07 a share, down from last year's fiscal quarter when it made $1.10 a share. In addition, the survey of analysts forecast net earnings of 49 cents per share on revenue of $7.3 billion.

Revenue is expected to range between $6.7 billion to $7.2 billion, at the lower end of the guide, with earnings in line with Fact Set's estimate in the range of 44 cents and 48 cents a share.

For the quarter ending in April, Dell normalized its supply chain, lowering its operating expenses 6% to $3.57 billion. Revenue fell to $20.92 billion but still topped Refinitiv's consensus of $20.27 billion. The PC industry saw a 23% drop in revenue, while the infrastructure unit that houses servers, storage and networking hardware saw an 18% drop in revenue. The company said adjusted earnings were up $1.31 per share, up from expectations of 86 cents. Due to cautious IT spending, Dell guided for the second quarter revenue in the range between $20.2 billion and $21.2 billion, the highest point of the range being the midpoint of analyst expectations.

AI Will bring a new type of PCs?

CNBC's Enrique Lores, HP's CEO, said that AI will radically change the fundamentals of the PC industry and therefore, HP. AI will, for one thing, enable PCs to analyze data in record time. Lores expects the industry to be truly refreshed as the customer experience will be transformed by this utterly new architecture. In the next few years, these innovative AI-driven models will be launched on the market, and they are expected to be available to consumers by the end of the year. Even Apple has boarded software engineers to capitalize on the potential of generative AI. What is certain is that AI is transforming the way people interact with technology and what technology can do, but it appears even Apple is lagging on this front.

Despite a challenging macroeconomy, both computing giants showed an exemplary execution of cost-control strategies. But HP didn't only protect the margins of both its PC and printing businesses as it raised its full-year guidance, despite consumers being more cautious about their IT spending. HP demonstrated that disciplined execution can make a powerful difference and even Wall Street is impressed by how well it navigated through the economic storm. HP CEO expects to recover PC sales in the remaining half of the year and relies on AI to fuel its future growth, as it will revolutionize what PCs can do.

PC makers could see a recovery as 2023 nears its close, according to the IDC report. Even Apple, whose share of the PC market has plummeted, is expected to benefit from the eagerly anticipated rebound.

This content is solely for informational purposes. It is not intended as investment advice.