...June 20, 2023 We believe the worst of the decline in PC sales has already occurred, which will set up HP for a recovery. The company's second-quarter earnings reflected the weakness in the demand for personal systems (PS), with its unit sales falling 28%. We expect significant inventory declines will lead to a mid-teens percent area decrease in global PC unit sales in 2023, which will pave the way for sequential improvements in HP's PS segment. While we acknowledge the uncertain macroeconomic backdrop may delay this recovery, HP is making progress toward reducing inventories. In addition, its high channel sales dependence will likely lead it to benefit from seasonal replenishment over the coming quarters. The company's profit margins remain in its target operating range. The profit margin of HP's PS business has declined from its peak but remains in the 5%-7% range, benefiting from the demand for premium units and its operating expense management. The company's printing margins have been...
