Surging Laptop Demand Helps Ease HP's Pain From Weak Office Printing Sales
August 27 2020 - 4:36PM
Dow Jones News
By Maria Armental
Hot demand for HP Inc. laptops as people work and learn remotely
helped ease the hit from a 20% revenue drop in the office-equipment
maker's more profitable printing business during the coronavirus
pandemic.
Laptop sales surged 30% in the July quarter from a year ago,
helping HP limit its revenue drop to 2%, as the company reported
$14.29 billion in sales, surpassing Wall Street's projection of
$13.34 billion. The decline was driven by the printer business, as
well as lower sales of desktops and workstations, with companies
investing less in office equipment as employees work from home.
The printing business -- smaller by revenue than the computer
business but typically more lucrative -- saw sales fall to $3.93
billion, driven by lower sales of commercial printers and
supplies.
The consumer printer market, though, was a bright spot, with
people stuck at home buying devices. Chief Executive Enrique Lores
said those sales should lift the printing business as people come
back to buy more ink and other printing supplies.
Earlier this year, Mr. Lores warned the July quarter would be
tougher than the preceding one for the company's printing business
as corporate customers curtailed spending on office equipment. "We
couldn't install many of the units that we had orders for," he said
at an industry event in May,
On Thursday, Mr. Lores said supply-chain challenges the company
encountered during the pandemic hurt printer sales early in the
quarter, particularly on the consumer end. But, the CEO said, the
consumer printing business that saw revenue increase 7% in the
quarter should strengthen. In addition, he said, commercial
printing sales, while still down, were improving and supply-chain
problems had subsided.
HP and fellow PC makers like Dell Technologies Inc. were
expected to benefit from the demand surge during the pandemic. But
the run on laptops has also created bottlenecks, with some school
districts scrambling to equip students and staff have seen delayed
shipments.
And sales of printers, particularly commercial models, have
dropped amid budget cuts and government lockdowns to help curb the
spread of Covid-19. Shipment of industrial printers declined 46.8%
in the most recent quarter, research firm International Data Corp.
said.
Xerox Holdings Corp., which last year launched an unsuccessful
hostile takeover bid for HP, saying the printing industry was
decades overdue for consolidation, reported its sales in the most
recent quarter fell by more than a third from a year earlier and
that it expected its core printing business to remain
challenged.
HP said it expects to end the financial year with a profit of
$1.83 to $1.87 a share, or $2.16 to $2.20 a share on an adjusted
basis. Analysts' projected $1.90 a share, or $2.11 a share as
adjusted, according to FactSet.
Profit for the quarter ended July 31 fell 38% to $734 million,
or 52 cents a share. On an adjusted basis, profit fell to 49 cents
a share from 58 cents a share a year earlier. The results beat
company and analysts' projections, according to FactSet.
Write to Maria Armental at maria.armental@wsj.com
(END) Dow Jones Newswires
August 27, 2020 16:21 ET (20:21 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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