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HP’s stock fell by 4.5% in after hours trading, despite the vendor beating Wall Street's expectations for fiscal third-quarter.
In HP's third quarterly report since it split from what is now Hewlett-Packard Enterprise, the firm reported sales of $11.89bn, down 4% year on year. Analysts had expected $11.46bn in sales, but a weak fourth quarter outlook rattled investors.
Net profit was down 8% to $783m from $854m a year earlier.
HP is the second largest shipper of personal computers in the world, behind Lenovo. The PC business accounted for 63% of HP's revenue in Q3. There was a boost in consumer sales, which rose 8%. However, commercial PC sales fell 3%.
While PCs generated the bulk of revenues, the printer business brought in a whopping 73% of the profit. But things aren't looking great for HP's cash cow. Printer revenues fell 14% year-on-year. Commercial sales were down 2% and consumer sales slumped by 14%.
HP’s recent decision to reduce inventory at its dealers and distributors contributed to poor performance in the printer business. In June, the firm announced that it would reduce distributor inventories in its distribution channels. HP said that revenue could go down as much as $225m per quarter in both Q3 and Q4 as a result of the strategic shift.
“In Q3, we delivered on our financial commitments and continued to make solid progress in executing against our core, growth and future strategic framework,” said Dion Weisler, President and CEO, HP.
"Although the markets remain challenged, we have the innovation and executional rigor needed to continue to take profitable share and invest in the right opportunities to drive long-term success for the company," HP CEO Dion Weisler said in a statement.