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HP CEO on earnings: Slowdown was ‘bigger than we were expecting’

Yahoo Finance Live anchors discuss third-quarter earnings for HP and HP CEO Enrique Lores’s remarks on the economic slowdown.

Video Transcript

BRIAN SOZZI: All right. Switching gears-- we're actually just staying on tech. The post-COVID hangover has finally made its way to HP Inc. Shares of the computer giant are under pressure this morning after the company's sales fell 4% in the most recent quarter, pushed down by declining sales of notebook computers.

I spoke with CEO Enrique Lores about the results. Here's what he had to say.

ENRIQUE LORES: Well, what we saw was a deterioration of consumer sales, and that increased as they go through the quarter. So this is something that we were expecting-- a slowdown in consumer. But clearly, the slowdown was bigger than we were expecting, and this had the impact on sales.

BRIAN SOZZI: Brad, you want to see an example of good leadership? It's that guy that was just right on our screen. That's Enrique Lores. So despite them missing by a penny on earnings, a sales miss by, I believe, close to a billion dollars, they were still able to come out here and show margin expansion in their printer business, which was under pressure.

Also, margins didn't fall off a cliff in their core PC business despite a lot of pressure continuing in that market. They're not out here saying, we're laying off 20% to 30% of our workforce. So, by and large, sure, not a great quarter from HP, not what we have come to expect under Lores. Challenging market conditions is my overall takeaway.

But still, compare the leadership at this company versus Snap and, boy, it is night and day.

BRAD SMITH: Yeah. Some of the bright spots-- the mobile workstation revenue, that was up about 60% for this most recent quarter. And [INAUDIBLE] look at some of the breakdown in where they're actually seeing that revenue come in from. The premium revenue, that was up 10%.

And then they're also seeing some of those tailwinds in personal systems. Hybrid work, that's what they're really leaning their confidence on right now. If you have more hybrid work, potentially, that creates more of an addressable market for them to sell into as well.

But they are continuing to see some of these headwinds supply chain concerns, and they talked about this on the call. I'm sure that came up in your conversation as well, in some pockets of the personal systems side of the business. So all of that considered, it's still really a commercial revenue business. That accounts for over 2/3 of their personal systems revenue in Q3.

And so those are the things to really kind of lean into from the HPQ side, but it's a larger question of is the macroeconomic environment still not ripe for them to actually see consistent growth in some of the categories, even though they did see solid mobile workstation revenue up and consumer premium revenue up.

BRIAN SOZZI: Yeah. Look, over the past month and a half, we've talked to Intel CEO Pat Gelsinger, now HP CEO Enrique Lores. We'll talk to HPE's CEO Antonio Neri later on in the 3 o'clock hour. You still don't get the sense there's a bottom yet in PC demand, and it's hard to get this visibility.

So realistically, we could be at this table three months from now talking about further declines in PCs. You know, ultimately, this situation may not clear up until the middle or end of 2023.

BRAD SMITH: Total units, to your point, down 25% in this most recent quarter as a result of the decline in PC-- Chrome demand, specifically here, they cited.