Remote-work demand eases loss from office purchases, gives
companies stock boost
By Maria Armental
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (August 28, 2020).
Hot demand for laptops as people work and learn remotely helped
HP Inc. and Dell Technologies Inc. soften the hit from a slowdown
in office-equipment spending during the coronavirus pandemic.
HP Thursday said laptop sales surged 30% in the July quarter
from a year ago, helping the company limit its revenue drop to 2%,
as it 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.
Meanwhile, Dell said consumer revenue jumped 18% for the
business that includes computer sales, while commercial-client
sales slumped 11%. Overall revenue, much like for HP, fell 3% to
$22.7 billion.
"We saw strength in the government sector and in education, with
orders up 16% and 24%, respectively, as parents, teachers and
school districts prepare for a new frontier in virtual learning,"
Dell Chief Operating Officer Jeff Clarke said in a statement.
HP and fellow PC makers like Dell were expected to benefit from
the demand surge during the pandemic. But the run on laptops has
also created bottlenecks. Some school districts, scrambling to
equip students and staff, have seen delayed shipments.
Both stocks were up more than 2% in after-hours trading after
the companies posted results.
The pandemic also has spelled problems for the two tech
companies from lower spending on in-office equipment. Dell saw
sales of servers and data storage equipment fall, the company said,
with customers shifting spending to facilitating remote work.
HP says its 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.
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.
Dell's profit dropped to $1.05 billion, or $1.37 a share. On an
adjusted basis, profit fell to $1.92 a share from $2.15 a share.
Analysts surveyed by FactSet expected a loss of 18 cents a share,
or an adjusted profit of $1.38 a share.
Write to Maria Armental at maria.armental@wsj.com
(END) Dow Jones Newswires
August 28, 2020 02:47 ET (06:47 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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