HP Stock Falls Amid Pandemic Uncertainty
By Maria Armental
HP Inc.'s stock declined 12% to $15.06 a day after the Silicon
Valley company pulled financial projections for the year, citing
uncertainty about the business impact of the pandemic, and left
unresolved the timing of its promised $15 billion worth of stock
Chief Executive Enrique Lores and Chief Financial Officer Steve
Fieler, speaking with analysts at a conference call on Wednesday,
said HP remained committed to a significantly enhanced repurchase
program but said that specifics would be determined when market
In February --w hile locked in a hostile takeover fight with
Xerox Holdings Corp. -- HP pledged to buy back $15 billion of its
own stock with $8 billion of that in the first year.
The market capitalization of HP, born from the 2015 split of
Hewlett-Packard Co., stands at roughly $22 billion.
HP's April quarter results showed the early impact of the
pandemic, both in customers' buying changes and supply chain
disruption that led to an 11% revenue decline.
Hardest hit in the April quarter was the print business, with
both supply and hardware seeing a double-digit percentage
The printing business, while smaller than the computer business,
typically carries a larger profit margin.
In the April quarter, the print business' operating margin
narrowed to 13.2%, from 16.4% a year earlier, while the personal
systems' margin improved to 6.6%.
Over all, second-quarter profit fell 2.3% to $764 million, while
revenue fell to $12.47 billion.
Earnings beat Wall Street targets but revenue fell short of
analysts' projected $12.93 billion, according to FactSet.
Company officials said they saw a significant slowdown in
commercial print in late March as offices closed and events and
trade shows were cancelled, and said they expected a larger hit to
the print business in the third quarter.
For the personal computer business, Mr. Fieler said it was a
back-ended quarter, with remote work and schooling driving demand
higher, particularly for notebooks.
HP historically doesn't give revenue projections but said that
it expects profit this quarter to fall to a range of 35 cents to 41
cents a share, or 39 cents to 45 cents a share on an adjusted
basis. Analysts, who expected 47 cents a share, have since revised
their projections within HP's range, according to FactSet.
The Silicon Valley company said its supply chain returned to
full capacity in early May, which should help it clear the
Write to Maria Armental at firstname.lastname@example.org
(END) Dow Jones Newswires
May 28, 2020 12:55 ET (16:55 GMT)
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