The three months to April 30 were "complicated," HP Inc said on Wednesday while trying to explain why its sales dropped by double digits in its fiscal second quarter of 2020.
Here's a summary of the bad news for the PC'n'printers industry grandee:
- Revenue of $12.5bn was down 11 per cent from the same period a year ago, and short of the $12.85bn Wall Street analysts had forecast for the tech giant, due to the coronavirus pandemic, lockdowns, and resulting supply chain disruption, we're told. Revenue in the Americas and EMEA was down 15 per cent, while APAC hauls dropped by 20 per cent.
- Net earnings of $764m were near enough $782m last year. Non-GAAP earnings per share was $0.51, beating expectations by seven cents, and GAAP EPS was $0.53, beating by 12 cents.
- Notebook sales were flat at $5.08bn; desktops were down 18 per cent to $2.41bn, workstations fell 23 per cent to $439m, supplies sank 15 per cent to $2.84bn, printing dropped 19 per cent to $4.16bn, commercial hardware plummeted 31 per cent to $808m, and consumer hardware slipped 16 per cent to $509m.
It's not hard to place the blame on the glum quarter, said HP Inc boss Enrique Lores. "The COVID-19 pandemic has created unprecedented global health and economic challenges," he said in a statement. "From the start of this crisis, HP’s number one priority has been the health and well-being of our employees. At the same time, we have marshaled our technology and resources to help address urgent needs in our communities."
Essentially, the biz saw demand for some of its stuff, but it couldn't realize that into sales growth during the pandemic: "We are seeing strong demand from our customers in notebook PC orders and Instant Ink subscriptions, as well as growing interest in 3D printing and digital manufacturing in key verticals such as healthcare," the chief exec claimed.
On a conference call with Wall Street analysts, Lores drilled down to the heart of the matter. It couldn't get the gear from its factories to punters due to on-going travel bans, lockdowns, and other measures:
There is no doubt that COVID-19 is impacting our business. While some areas performed very well as people shifted to work from home, others suffered and we faced supply chain disruptions. Despite these challenges, we delivered non-GAAP earnings per share of $0.51. Revenue was $12.5 billion down 11% driven by macroeconomic and supply chain challenges associated with the pandemic.
"Both Print and Personal Systems experienced manufacturing and supply chain disruptions during the quarter," he went on.
"As we noted on our February call, manufacturing in China remained shut down after Chinese New Year before beginning to ramp in late February.
"Starting in late March, we also experienced disruptions to operations in Southeast Asia and other parts of the world as the pandemic spread. We took swift action to adjust to these developments and our manufacturing capabilities were largely back to full capacity by early May.
"Moving forward, we’re evaluating plans to improve the resiliency of our supply chain, including increasing our levels of own inventory to help mitigate the risk for future of it. On the demand side, there is no question that a lockdown around the world has created new and different demand dynamics in the market. This presents both tailwinds and headwinds across our portfolio."
Having said all that, confidence in HP Inc was not too high among traders: shares were down five per cent in after-hours trading to $16.25 apiece. ®