From HP’s fourth-quarter earnings conference call:
“We are advancing our leadership in our core markets and expanding our reach into profitable adjacencies. We are positioning ourselves to develop new markets with our technologies and IP placing significant opportunities to create and scale new businesses over time. And we are transforming the way we operate across the Company with a focus on building out our cloud infrastructure and our digital capabilities while reducing our cost structure.”
PC Recovery
The Palo Alto, California-based consumer hardware firm, which serves about a fifth of the global PC market, bettered its financial position in recent months supported by the improvement in demand conditions. The ongoing remote work shift and digital transformation bode well for the company as far as sales are concerned, though production disruptions in China and supply chain issues might drag the momentum. The uptrend might also be offset by the recessionary conditions and muted tech spending. It is estimated that component supply shortages would constrain HP’s growth through the first half of 2021.
The company continues to invest in the business – thanks to the positive cash flow – expanding the differentiated portfolio and maintaining its leadership position in the PC market. Complementing those efforts, the company has embarked on a cost-reduction drive, with focus on cutting discretionary spending and streamlining the real estate footprint.
Mixed Q4
In the fourth quarter, revenues edged down to $15.3 billion, mainly due to weakness in the Printing segment. However, adjusted earnings moved up 3% annually to $0.62 per share and surpassed the market’s prediction.
Read management/analysts’ comments on HP’s Q3 2020 results
“During Q2 and Q3, we experienced some supply chain shortages that reduced our ability to supply demand to many of our key retailers, and this definitely during Q4, demand has continued to be very strong on the consumer side and resellers have replenished their stock. This had been a tailwind for us in the business. We expect this to continue in the early part of 2021 because we continued to see very strong demand on the consumer side of supplies,” said Enrique Lores, chief executive officer of HP.
Stock Performance
HP’s stock was one of the worst-hit by the market selloff triggered by the pandemic early this year. It witnessed volatility so far this year, mostly languishing in the red territory. However, the stock picked up pace in recent weeks and pared most of the losses. In the past twelve months, it gained about 11%.