Continuing the stagnant revenue streak, HP Inc. shares initially jumped 5% in trading after hours Thursday after reporting fiscal third-quarter sales that surpassed Wall Street’s $ 1 billion estimates, due to a pandemic. affected boom in sales of personal computers.
HP HPQ,
reported net income of $ 734 million, or 52 cents per share, compared to net income of $ 1.2 billion, or 79 cents per share, in the fourth year ago. Adjusted earnings were 49 cents per share, compared to 58 cents in the year last quarter.
Revenue fell 2% to $ 14.3 billion from $ 14.6 billion a year ago, largely due to struggles in the printing department, but beat expectations by $ 1 billion. Analysts surveyed by FactSet forecast revenue of 43 cents a share on sales of $ 13.3 billion.
“PC sales were great. They have become essential. We are seeing a trend where once there were one to two PCs per house; now, it’s one per person at home because they need it for work and learning, “HP Chief Executive Enrique Lores told MarketWatch in a phone call before the results were announced.” This drives demand. “
As a reflection of its optimism, the company offered the fourth quarter adjusted guidance adjusted to 50 cents to 54 cents a share. FactSet analysts had expected 50 cents a share.
HP’s fiscal performance in the third quarter benefited from continued demand for personal systems during the pandemic amid a remotely working and online learning wave. PC sales improved 7% over the year. Patrick Moorhead, chief analyst at Moor Insights & Strategy, predicted “incredible” growth in consumer PC revenue (42%, year-over-year) and notebook units (32%).
“As mobility and powerful, lightweight connected PCs become critical for not just the household, but every member of the household, we have seen the demand rise,” said Daniel Newman, chief analyst at Futurum, MarketWatch. “HP has not only embraced this, but has been operationally efficient, which is a major driving factor in its beat on the top and bottom line.”
The same was held for Dell Technologies Inc. DELL,
and VMware Inc. VMW,
, both reported strong consumer PC demand in quarterly results Thursday.
Read more: Dell, VMware shares stand on strength of work (and learning) from home
HP’s quarter could have been even better, but delivery constraints, such as increased components and logistics costs, pushed the printer company down 20%. Lores said he expects a bounceback in the current quarter as some commercial customers return. Office closures nationwide have sold sales of printers and consumables for HP and others. Xerox Holdings Corp. XRX,
, which unsuccessfully followed a hostile $ 35 billion bid for HP, last month reported a 38.5% decline in hardware sales in the June quarter.
HP shares are down 9% this year. The broader S&P 500 index SPX,
is up by 8% in 2020.
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