HP posts mixed Q1 results as revenue slipped 5% year-over-year to $26.8B; strong US dollar cited as culprit
Context & Ripple Effects
This Q1 print lands mid-slump for old HP: revenue had already missed targets in the prior quarter, and it would fall further in the Q2 report just months later, down 7% to $25.5B. Management's strong-dollar explanation frames a year in which reported revenue kept shrinking even as earnings held up better than the top line.
The arc matters because this is still the combined company — the same reporting line that ends the fiscal year with the first post-split results after the November 1 breakup. A 5% decline blamed largely on FX, rather than unit demand, is the kind of quarter that strengthens the case for separating the slower PC-and-print business from enterprise hardware.
First-order effects
- Investors reading this quarter get a mixed signal: $26.8B in revenue is down 5% YoY, but management attributes the shortfall to currency translation rather than collapsing unit demand, which caps how bearish the print alone can be read.
- HP's full pre-split portfolio — PCs and printing alongside enterprise hardware — absorbs the entire dollar headwind at once, making segment-level performance harder for buyers and analysts to isolate from the FX effect.
Second-order effects
- A currency-driven top-line squeeze pressures management to show structural fixes, and within the year the company responds by splitting into two listed firms — the separation whose first quarterly report then shows revenue down 9% and misses earnings targets.
- For PC and printing rivals, a strong-dollar quarter from one of the largest vendors signals pricing and margin pressure industry-wide, since translated overseas revenue shrinks for every US-reporting hardware maker selling globally.
Third-order effects
- Once HP Inc. emerges as the standalone PC-and-printing company, its revenue becomes a purer read on device cycles — visible later in swings like the 2% growth on strong PC sales in late 2016 and the 19% drop in early 2023 — rather than being cushioned or masked by enterprise segments.
- If currency remains a recurring explanation for hardware revenue misses, investors will increasingly discount reported top-line figures and price these stocks off constant-currency trends and per-segment profitability instead.
The trend: HP's string of currency-pressured revenue declines through 2015 built the case for breaking the company apart, with the PC-and-printing business left exposed to device-cycle volatility on its own.