HP Inc. (HPQ) reported better-than-expected third-quarter earnings on Thursday evening, enabled by a tight cost control in each of its business segments.
HP’s personal systems sales in the third quarter were flat from a year ago. Sales for the print segment were up 24% year-on-year. Operating profit margins in the Personal Systems segment were up 290 bps year-on-year and increased by 540 bps in the printing industry.
Here’s how HP performed against Wall Street’s second-quarter estimates, according to Bloomberg’s consensus estimates:
Net sales: $15.3 billion, up 27.3% year over year, versus an estimate of $15.93 billion
Sales of personal systems: $10.4 vs $10.85 Billion Estimated
Print sales: $4.9 billion vs. $4.94 billion estimate
Custom WPA: $1.00 vs $0.84 estimate (Business Advisory: $0.81 to $0.85)
But investors can capitalize on the successive declines in sales for HP’s various product lines as the pandemic continues to hamper return to office plans. HP said print sales were down 8% from the third fiscal quarter, supplies sales were down 7% and workstation sales were down 5%. Notebook sales were down 2% from the fiscal third quarter. Desktop sales were up 1%.
HP CEO Enrique Lores said Yahoo Finance’s sales would have been stronger had there been no component shortages, rather than the company being hampered by changes in office reopening.
“What we’re really seeing is strong demand on the commercial side as offices reopen. This is really what we’re seeing from a demand perspective – what you see in our numbers is a combination of demand, but it’s mainly driven by supply Lores explained.
Pauses in demand from the education sector amid uncertain school reopening dates also weighed on demand early in the quarter. Lores says demand in the education sector has returned to more favorable trends as school openings have become more apparent.
HP also issued above consensus EPS guidance for the fourth fiscal quarter and full year.
Lores added that HP will join companies like Delta Air Lines to take a tougher line on employee vaccinations for COVID-19.
“We planned to reopen our offices in the US in September. We decided to postpone that due to the impact of the Delta variant and the uncertainty of the situation. Which also decided to be able to come back from November 1 going to an office, we’re going to ask employees to show a vaccination certificate. We think it’s important to do that, to protect employees, which is still one of our main priorities in managing this environment. It was a difficult decision that we carefully evaluated because we know there are employees who really want it. It will be really controversial for other employees but then we decided it was the right decision because we are trying to protect the majority of our employees And to protect them to ask for proof of vaccination, we think it’s important to minimize the risk of people actually getting sick from the coronavirus,” Lores said.