HPQ HP Inc

By Rachael King 

HP Inc. said sales rose for a second straight quarter after a prolonged slump, as the personal-computer business showed further signs of life.

The Palo Alto, Calif., company on Wednesday said revenue in the quarter that ended Jan. 31 rose 4% from a year earlier, with sales of notebook PCs especially strong. Sales in its printer business slipped 3%, however, a smaller decline than in other recent quarters but one that illustrates continued challenges in a business that HP has significantly staked its future on. Net profit from continuing operations fell 6%.

Over the past several years, HP and other computer makers have battled a declining market for desktop computers, notebooks and workstations. While parts of the PC market are still declining, however, there are pockets of growth such as high-end corporate notebooks and gaming systems, which Chief Executive Dion Weisler is targeting. Sales of notebook PCs jumped 16% in the latest period, and the company says it has gained traction in gaming with its OMEN line of gaming products, for example.

"We went from nothing in gaming to being a real player in about 18 months," Mr. Weisler said in an interview last week.

That is helping HP outpace the overall PC market. During the three months through December, its PC shipments grew 6.6% from a year-earlier period even though global PC shipments declined 1.5% for all suppliers, according to research firm International Data Corp.

Personal computers still dominate HP's revenue, but the printing business was responsible for nearly three-fourths of its profit last year. HP is trying to innovate to spur growth in printers, a business that broadly has been in decline. The company invented a palm-sized printer, called the Sprocket, targeted to younger consumers that is designed to pair with smartphones. Mr. Weisler said that sold well over the holidays.

Bill Kreher, technology analyst at Edward Jones, noted that the printer business appears to be suffering from weakening prices. HP said unit sales of commercial printer hardware rose 2% in the latest quarter, for example, but revenue for the segment fell 8%.

HP's largest source of profit is the ink and toner that printers use -- a business that has been hit by competitors selling less-expensive ink cartridges and a general decline in printing of documents, especially by younger people. Sales in that segment fell 3% in the latest quarter, improving from a 16% drop in full fiscal year 2016.

"It's a clear proof point that we're on the march to stabilize supplies, revenue and constant currency by the end of this year," Chief Financial Officer Cathie Lesjak said in an interview.

HP shares edged up about 0.5% in after-hours trading following the results.

HP said that earnings per share in the latest quarter, adjusted to exclude items such as restructuring charges rose 6% to 38 cents each, compared with analysts' expectations of 37 cents, according to Thomson Reuters. Overall, Wall Street analysts expected revenue of $11.84 billion, down 3.3% from $12.25 billion reported in the year-earlier period.

For the fiscal second quarter, HP projected per-share earnings in the range of 37 cents to 40 cents. Analysts polled by Thomson Reuters expected per-share earnings of 38 cents.

Write to Rachael King at rachael.king@wsj.com

(END) Dow Jones Newswires

February 22, 2017 17:35 ET (22:35 GMT)

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