HPQ HP Inc

By Dan Gallagher 

Workers snapping up personal computers to wait out the coronavirus pandemic at home isn't proving to be the windfall many expected.

There were indications last month in data from IDC and Gartner that showed a surprising drop in PC sales for the quarter ended in March. HP Inc., ranked by IDC as the world's second-largest PC vendor by market share, drove the point home further Wednesday with results for its fiscal second quarter, which ended in April.

The company reported combined revenue from laptop and desktop computers was down 7% from a year earlier--the biggest drop in four years and sharper than Wall Street had expected. HP's shares fell 5% after the report.

Workers rushed to beef up home offices when companies began sending them home in March. But PC supply was still limited by production constraints at chip maker Intel Corp., according to the Gartner and IDC reports. Those issues seem to have been sorted out. HP said Wednesday that about half its PC sales last quarter were in April, leaving a strong backlog of orders at the end. That suggests better PC results in the current quarter, which ends in July.

But demand is questionable beyond that, especially as businesses across the world begin bringing workers back. While some companies have talked about making remote working more permanent, how that will actually play out over the longer term remains uncertain. And of course, sharply rising unemployment means there will be fewer workers to equip.

That makes the coming year a tough one for HP--especially since fewer people in the office also complicates the company's plans to revitalize its important print-supply business. Printing simply happens more frequently at work than at home. It also could slow the enhanced share-buyback plan that was a centerpiece of HP's resistance to overtures from Xerox.

The pandemic may have saved HP from that deal, but it is complicating the company's efforts to prove the deal wasn't needed.

Write to Dan Gallagher at dan.gallagher@wsj.com

(END) Dow Jones Newswires

May 28, 2020 07:14 ET (11:14 GMT)

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