HP CEO says coronavirus outbreak will dent earnings for the current quarter

• HP Inc.'s bottom line will take a hit this quarter due to the coronavirus epidemic, CEO Enrique Lores told CNBC.
• "We produce most of our products in China," said Lores. American businesses have shut down factories in China, particularly in the Hubei province, due to the novel virus outbreak.
• "We have estimated that in Q2 this will have an 8 cents impact on EPS, and this is what we have built in our predictions," he said in a "Mad Money" interview.

HP Inc.'s bottom line will take a hit this quarter due to the coronavirus epidemic, CEO Enrique Lores told CNBC Wednesday.

The impact will be most felt in the hardware company's manufacturing, he said in a "Mad Money" interview with Jim Cramer. The COVID-19 outbreak in China forced many American businesses — including HP — to shut down their factories there.

"We produce most of our products in China," said Lores, who took the role of chief executive in November. "After Chinese New Year, production has slowed down. We are seeing a recovery, and the way we're looking today is a temporary impact during Q2."

The majority of HP's factories in China are open, though production is not at maximum capacity, he said. HP builds printers and computers.

Management guided earnings per share between 49 cents and 53 cents for the April quarter. The company does not offer revenue outlook. Wall Street analysts forecast sales to come in at about $13.5 billion in the 2020 second fiscal quarter.

"We calculated, and we have estimated that in Q2 this will have an 8 cents impact on EPS, and this is what we have built in our predictions," Lores told Cramer.

HP shares jumped 5.66% the day after it delivered on Monday a top- and bottom-line beat in the first fiscal quarter and upped its share buyback program. On the earnings call, Lores said HP is trying to restore full production "as quickly as possible" to meet customer demand.

While the novel virus could delay customer plans to upgrade their PCs operating on Microsoft's Windows 10, management said HP could recoup some of the losses later this year. Microsoft itself announced Wednesday that it may miss the revenue guidance it provided for its fiscal third quarter due to the coronavirus.

HP stock traded lower 2.74% in the session as the major averages except the Nasdaq Composite turned in another down day.

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