HP earnings in line with expectations, CEO says tariffs would hit the consumer

It’s all eyes on artificial intelligence PC demand and tariffs for HP Inc. (HPQ) CEO Enrique Lores entering 2025.

“Some of that [cost of potential tariffs] will have to go to consumers given what is the overall margin that we have in the categories. But again, we need to wait and see what the final tariffs are for us to define what the exact plan is going to be,” Lores told Yahoo Finance on Tuesday (video above).

The comments on prices to consumers echo some of those made by Best Buy CEO Corie Barry today on her call with reporters.

Lores said he is looking forward to working with the incoming Trump administration and prefers smooth trading relationships between countries.

We are a global company that does business in many parts of the globe, and that does development in many parts of the globe, and that has manufacturing in many parts of the globe. So for us, an easy way of trading across countries is the preferred option,” Lores added.

Read more: How do tariffs work, and who really pays them?

As tariff convos whipsaw markets, HP released mixed fiscal fourth quarter sales results after the market close.

Sales of consumer PCs fell 4% in the quarter, while commercial sales improved 5%. Operating margins in the PC division fell sharply year over year.

Similar to the previous quarter, commercial clients are upgrading their computers ahead of Microsoft (MSFT) ending support for Windows 10 in October 2025.

Consumer PCs are under slight pressure as people await new AI computer releases and spend more money on experiences.

Worldwide shipments of traditional PCs in the calendar year third quarter hit 68.8 million, down 2.4% year over year, according to data from IDC. Sales were hurt by rising costs and inventory replenishment in the prior quarter, IDC explained.

• Net sales: $14.1 billion (+1.7% year over year) vs. $13.9 billion estimate

• Personal systems sales: $9.6 billion (+2% year over year) vs. $9.7 billion estimate

• Printing sales: $4.5 billion (+1% year over year) vs. $4.2 billion estimate

• Diluted earnings per share (EPS): $0.93 (+3% year over year) vs. $0.93 estimate (guidance: $0.89-$0.99)

• Weak margins: Quarterly operating margins dropped to 8.5% from 9% a year ago

• Fiscal first quarter EPS guidance: $0.70 to $0.76 vs. $0.86 estimate

• Full-year EPS guidance: $3.45 to $3.75 vs. $3.60 estimate

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“Demand, without a doubt, has returned for PCs amongst consumers and commercial buyers,” IDC research manager Jitesh Ubrani said. “However, much of the demand was still concentrated at the entry-level thanks to a recovering economy and the back-to-school season in North America. That said, newer AI PCs such as Copilot+ PCs from Qualcomm along with Intel and AMD’s equivalent chips as well as Apple’s expected M4-based Macs are expected to drive the premium segment in coming months.”

Where HP surprised favorably for the first time in a while was its printing business.

Printing sales rose 1% from the prior year and came in ahead of expectations. The upside could stem from struggles at rival Xerox (XRX), which is smack in the middle of deep restructuring that pros say is causing market share loss.

“On print, results from peers such as Xerox came in below expectations, with Xerox’s printing equipment sales declining double-digits year over year due in part to an increase in competitive activity in certain markets,” Evercore ISI analyst Amit Daryanani said in a client note.

Lores said HP is “gaining share” in the printing business, though declined to call out Xerox and cautioned the industry remains volatile.

“We think that the overall print market in 2025 will slightly decline. The decline will be less than what we saw this year, but our goal continues to be to perform better than the market,” Lores said.

Brian Sozzi is Yahoo Finance’s Executive Editor. Follow Sozzi on X @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations, or anything else? Email brian.sozzi@yahoofinance.com.

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