HP, Inc. (HPQ) reported a solid earnings beat Tuesday evening, but the market wasn't having it. Shares dropped more than 5% in extended trading as investors digested news of significant layoffs and guidance that came in below expectations.
The Numbers
HP delivered quarterly earnings of 93 cents per share, topping the 92-cent analyst consensus. Revenue hit $14.6 billion, also beating the Street's $14.48 billion estimate. On paper, it looked like a win.
But here's where things got messy. The company unveiled a sweeping cost-cutting initiative expected to generate roughly $1 billion in annual savings by the end of fiscal 2028. That sounds great until you realize it comes with approximately $650 million in restructuring charges and the elimination of 4,000 to 6,000 jobs worldwide.
What Management Is Saying
"HP's strategy to lead the Future of Work continues to deliver strong performance, marked by our sixth consecutive quarter of revenue growth," said Enrique Lores, CEO of HP.
He emphasized the company's focus on execution: "Our FY25 results reinforce the power of our portfolio and the strength of our team in a dynamic environment. As we accelerate innovation across AI-powered devices to drive productivity, security and flexibility for our customers, our focus for FY26 is on disciplined execution. We are committed to driving measurable results — ensuring that our plans translate into long-term value for our shareholders."
The Guidance Problem
Here's what really spooked investors. HP expects first quarter adjusted earnings between 73 cents and 81 cents per share, with a midpoint below the 79-cent consensus. For the full fiscal 2026, the company projects adjusted EPS of $2.90 to $3.20, compared to analyst estimates of $3.12.
The company explicitly noted that its outlook "reflects the added cost driven by the current U.S. trade-related regulations in place, and associated mitigations." Translation: tariffs and trade restrictions are creating headwinds that the company is still working to navigate.
HP stock closed Tuesday's after-hours session down 5.18% at $23.06, proving once again that even when you beat estimates, the forward-looking story matters more.
