The Six Five team discusses HP’s latest earnings.
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Daniel Newman: It was a tougher quarter. I think the company’s first quarter net revenue was down 18.8%. Let’s just start by saying much greater exposure than Dell to the PC market. It is their biggest business and it was impacted in a pretty significant way. They did reaffirm guidance. They did show some areas of strength and that’s going to be in some of the innovation areas and in some of the remote and hybrid work areas, which is where I was really encouraged. As many of you know, the company bought Poly last year. We know we’re going in this period of return to work versus working in office. You and I had worked with Dave Shull very closely, CEO of Poly.
Now he leads part of that business unit for HP, Pat. This is an area where I think it could be very interesting for the company because while personal systems revenue was down 24%, commercial personal systems revenue was down 18%, print was down 5%. The area around innovation and growth was the one area that the company is seeing some strength and growth. Remote work, hybrid work. That’s going to be a really interesting opportunity for the company to implement and get some strength moving forward. Pat, you and I – HP had some more challenges than others did when it came to supply chain throughout the process. It didn’t grow as much as some of the others. But having said that, it’s been steady. They’re going to have to weather two or three really difficult quarters, Pat. I think some of their premium products, I’ve been using their new Dragonfly.
I think some of these products are really great, but, we are going to see an incredibly competitive market. The ability to implement technologies and then expand this peripheral business, to me, are going to be two of the most important opportunities for it to scale and to grow. Pat, it wasn’t any surprises here. I did not expect it to be good. Didn’t end up being good. They’re going to need to see the market turn. I don’t know what their magic bullet is, because I don’t know if the hybrid work is big enough to turn the ship. But, I do think it’s an area that the company needs to lean into, to sell the market that there is growth ahead.
Pat Moorhead: It’s interesting with HP, I sit in some meetings with other industry analysts and they talk about the death of HP and the PC industry. I got to tell you, I’m here to say that the death of HP and the PC industry has been greatly exaggerated. Heck, even Lenovo pointed out, in their earnings released, that HP made a big rebound. This company is the number two highest market share company out there on the planet. I think some people, smart people that I respect, are confusing HP’s overall strategy, which is diversification with hybrid systems, with gamings, with workforce solutions as a service. Even forgetting that the company makes $800 million in profit, dollars in printing in a single quarter. Sorry, $870 million in operating profit dollars in the current quarter. That is absolutely unheard of. So I look at a solutions-based focus and strategy. I like the strategy. Is it going to be hard to get there? No.
They had a hard time with supply chain. I think you and I, when we listened to the calls, it was put on the slides, probably six straight quarters. It was an issue. I’ve talked to channel partners and it was an issue. The company did stumble. But, let’s not confuse that with the company deciding to get out of PCs or something like that. I think that’s lazy and I think that’s just dumb. Both you and I are going to be attending one of their big events up in Chicago. We’re going to have the chance to talk to the leaders of the company. It’s been a while since I’ve had the ability to do that with the exception of the quarterly calls that we do with the CF, CEO, and the CFO. But, I’m interested in catching up. I talked to Alex once every other month, but it’s been great to catch up with the print folks, the Poly folks, and the peripheral folks, as well.
Daniel Newman is the Chief Analyst of Futurum Research and the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise. Read Full Bio