HP Inc. reported a surprise drop in revenue for its printer supplies business during its latest quarter, which CEO Dion Weisler attributed to sales shifting online among commercial customers.
For HP's first fiscal quarter of 2019, which ended 31 January, print supplies revenue dropped 3 percent from the same period in 2018. And the company said to expect a roughly 3 percent decline in supplies revenue for the rest of the fiscal year.
"More commercial customers are purchasing supplies online. And while we have leading share online, it's at a lower percentage than our share with traditional commercial resellers and in-store retailers," Weisler said Wednesday during the company's quarterly conference call with analysts.
"The omni-channel and the consumer preferences to buy online are definitely not new," Weisler said. "What we've seen is more commercial customers purchasing online."
HP is "taking action" in the supplies business including through additional targeted marketing and lowering its supplies inventory, he said.
HP's stock price fell 10 percent in after-hours trading Wednesday to US$21.35, and was down another 6.5 percent Thursday, to US$19.95, shortly after the market opened.
Weisler said that HP had "incorrect supply share assumptions," which made it "difficult" to see the change in buying behavior during the company's fiscal first quarter.
For its fiscal first quarter, HP reported that revenue in its print segment was essentially flat year over year at US$5.06 billion in fiscal first quarter, compared with US$5.08 billion a year earlier.
Net earnings during HP's first fiscal quarter came in at US$803 million, or 51 cents per diluted share—down from US$1.94 billion, or US$1.16 per diluted share, during the same period a year earlier. Revenue for the quarter rose 1.3 percent, to $14.71 billion, from US$14.51 billion a year ago.