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HP turns back on $1b in annual sales by quitting Russia and Belarus

Revenue hit for HP far larger than many tech providers post-pullout but PC, print giant stays course

PC and printer giant HP Inc. is boldly but belatedly turning its back on Russia and Belarus due to the continued conflict in Ukraine.

HP was among the first wave of tech companies to suspend shipments to the countries soon after Russia invaded its neighbor on February 24, but now the company's president and CEO Enrique Lores is making the move more permanent.

"Considering the COVID environment and long-term outlook for Russia, we have decided to stop our Russia activity and have begun the process of fully winding down our operations," he said on a Q2 earnings call with analysts.

The reason this move is worth paying close attention to is that there is a dollar figure associated with the pullout. Lores says "business there accounted for approximately $1 billion in revenue in fiscal year 2021,"

This is a much bigger hit than several other technology providers expect to take from abandoning the Russian market in 2022. Adobe anticipates a $75 million hit this year and RPA vendor UiPath said it'd cost $15 million. Dell cut shipments to Russia in early March and Lenovo has halted them too.

Cisco last month warned investors that the war in Russia cost it up to $200 million in lost sales in Q3. More significantly, it said the conflict as well as lockdown in Shanghai, which disrupted local manufacturers and sent ripples down the supply chain, will cost it between $131 million and $720 million in its current fiscal year.

Schneider Electric is going a step further and selling its Russian operations to local management, writing off $315 million in the process.

HP's Lores revealed the exit of Russia and Belarus as HP reported financial results for Q2 of its fiscal 2022 ended 30 April: revenue grew 4 percent to $16.5 billion including a 9 percent hike in the Personal Systems Group to $11.532 billion, and a 7 percent drop in Printing to $4.963 billion.

In the PC unit, notebooks were up 3 percent to $7.734 billion, and desktops were up 28 percent to $2.855 billion as corporate customers refreshed their estates.

Lores said: "The growth this quarter is really helped from an easy compare last year. If you remember last year, not many companies were investing in equipment for the office. This drove the sales of desktops and workstations down. And now we are seeing the opposite effect as some of this investment is coming back."

In print, the CEO said HP continues to "operate in our components and logistics constrained environment, and performance was also impacted by the macro events this quarter."

He added: "We expect supply chain dynamics to improve but continued shortages, especially in application-specific integrated circuits will impact print for the remainder of the year.

"We are actively working with our partners to mitigate the risks by executing on dual sourcing whenever possible and redesigning [circuit] boards and components in our printers."

Gartner research director Ranjit Atwal said of the move: "Many US based companies are taking a stance to show attract new and keep old employees they 'care' about the world. It's more about employee care than revenues, also I would bet much of the $1 billion revenue in 2021 has already diminished."

HP Inc. recorded a net profit of $1 billion for the period, lower than the $1.228 billion reported in the same quarter of last year. ®

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