HP Slashes Profit Forecast Amid Tariff Pressures, Shares Plunge

HP Inc. has revised its fiscal 2025 profit outlook downward, citing escalating U.S. tariffs on Chinese imports and a decelerating PC market. The announcement led to a 14% drop in HP’s shares during after-hours trading on Wednesday.

The company now anticipates adjusted earnings per share between $3.00 and $3.30, a decrease from the previous estimate of $3.45 to $3.75. Analysts had projected a full-year profit of $3.49 per share. HP’s second-quarter revenue stood at $13.22 billion, slightly surpassing expectations, but adjusted earnings per share fell short at 71 cents, missing the anticipated 80 cents.

CEO Enrique Lores attributed the downturn to increased costs from tariffs and related mitigation efforts. To counteract these challenges, HP is expanding production in countries like Vietnam, Thailand, India, Mexico, and the U.S., aiming for nearly all North American products to be manufactured outside China by June’s end.

Additionally, HP plans targeted price increases on select products to offset rising expenses. The company is also undergoing a restructuring plan, which includes up to 9,000 job cuts, aiming to save approximately $300 million by the end of fiscal 2025.

Despite these hurdles, HP reported a 7% year-over-year increase in its Personal Systems segment, encompassing desktop and notebook PCs. However, its Printing unit experienced a 4% decline in the same period.

Looking ahead, HP forecasts third-quarter adjusted earnings per share between 68 cents and 80 cents, below the 90-cent consensus estimate.

In a related development, a federal court recently ruled that former President Trump’s authority to implement broad tariff measures was limited, potentially affecting many imposed duties, including a significant tariff on Chinese goods.

As of the latest trading session, HP’s stock is priced at $27.20, reflecting ongoing investor concerns amid economic uncertainties.