HP dived as much as 15% in extended trading on Wednesday after reporting second-quarter earnings that were hit hard by tariffs.
“Due to additional tariff costs that could not be fully mitigated in the quarter, our non-GAAP operating profit fell short of expectations,” HP’s CEO, Enrique Lores, said on Wednesday’s earnings call.
Second-quarter revenue rose 3.3% to $13.22 billion, beating analyst expectations of $13.14 billion. Profit fell 17% to $700 million compared to the same period last year, missing expectations.
The earnings report and guidance disappointed investors despite HP’s efforts to dampen the impact from tariffs by diversifying its supply chain.
“We recently increased our production coming from Vietnam, Thailand, India, Mexico, and the US,” Lores said. “By the end of June, we now expect nearly all of our products sold in North America will be built outside of China.”
Later in after-hours trading, the company pared losses to about 8%. HP’s stock has slumped 16% so far this year, in part because of earnings misses and underperformance compared to peers.
Trade tensions have been a prominent theme this earnings season.
Some companies including General Motors, Chipotle, and PepsiCo lowerd their forecasts for upcoming quarters. Others, such as Snap, Delta Air Lines, and American Airlines, scrapped guidance completely, citing too much uncertainty from import duties.
The US imposed a 145% duty on products made in China, as part of Trump’s sweeping “Liberation Day” tariffs in April. It reduced them to 30% earlier this month.
On Wednesday, a federal court found that Trump does not have the authority to impose his sweeping tariff strategy. The unanimous decision by the three-judge panel came during ongoing trade negotiations between the administration and countries around the world. On Friday, Trump threatened a new tariff on the European Union, but backed down from the plan over the weekend.
The US Court of International Trade’s three-judge panel was unanimous in its ruling, declaring that the tariffs imposed by the Trump administration would be vacated.
