Investing.com - HP (NYSE:HPQ) on Thursday delivered softer guidance for the current quarter, warning that U.S. import tariffs on China would drive up its costs.
Shares in the PC maker fell more than 3% inpremarket trading on Friday.
For the fiscal second quarter, HP expects adjusted diluted net earnings per share to be in the range of $0.75 to $0.85, or $0.8 at the midpoint, compared with expectations for $0.85.
"HP’s outlook reflects the added cost driven by the current U.S. tariff increases on China, and associated mitigations," Dell (NYSE:DELL) flagged. Earlier this week, U.S. President Donald Trump said he would place an extra 10% levy on Chinese goods on March 4, on top of a 10% duty he previously imposed on February 4.
However, the company said it had made efforts to lessen its dependence on China, saying it expects more than 90% of HP products sold in North America "will be built outside" of the country by the end of 2025.
"HP has [...] been proactive around building inventory ahead of the tariffs, which will help mitigate the impact, but does represent a near-term free cash flow headwind," analysts at Evercore ISI said in a note to clients.
The softer guidance offset fiscal first-quarter revenue that topped estimates, thanks in large part to growing demand for HP’s artificial intelligence-enhanced offerings.
In the three months ended January 31, HP reported adjusted per-share income of $0.74 on revenue of $13.5 billion. Analysts polled by Investing.com had projected adjusted per-share profit of $0.74 and sales of $13.38 billion.
Looking ahead to the 2025 fiscal year, adjusted diluted net earnings per share guidance is tipped be in the range of $3.45 to $3.75, or $3.60 at the midpoint, versus estimates of $3.59.
(Yasin Ebrahim contributed reporting.)