HP Inc. reported fiscal third-quarter revenue of $15.7 billion, a record for the period, but HP stock fell more than 9% after hours as PC unit shipments dropped 16% year over year and the company warned that memory costs would continue to pressure margins.
In the Personal Systems segment, which covers PCs, revenue climbed 18% to $11.8 billion despite a 16% drop in total unit shipments, with consumer units off 19% and commercial units off 14%
The segment’s operating margin contracted to 4.6%, compared with 5.2% in the preceding quarter. Printing revenue fell 2% year over year to $3.9 billion. CFO Karen Parkhill said the volume decline was expected, and that the company prioritized higher-value unit placements and raised prices to offset commodity cost inflation.
Looking ahead, Parkhill told analysts that memory and storage costs are projected to grow as a larger portion of the bill of materials in the fourth quarter, according to The Wall Street Journal. A margin recovery is not expected until fiscal 2027, according to Reuters. “Given the impact of commodity-driven price increases, we expect below seasonal revenue performance in the fourth quarter,” Parkhill said on the call, according to Reuters. HP posted GAAP diluted earnings per share of $0.71, down from $0.80 a year earlier.