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HP gives upbeat forecast, fuelled by continuing laptop boom

Sales gained 27% to $15.9bn in the second quarter.
Image: Patrick T Fallon/Bloomberg

HP Inc. forecast robust profit gains for the current period, indicating consumers are continuing to spend on personal computers, printers and other gear for remote work while companies are upgrading hardware ahead of office reopenings.

Fiscal third-quarter profit, minus certain items, will be 81 cents to 85 cents a share, the Palo Alto, California-based company said Thursday in a statement. Analysts, on average, estimated 75 cents. Fiscal year 2021 earnings will be $3.40 to $3.50 a share, also well ahead of analysts’ projections.

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Sales gained 27% to $15.9 billion in the second quarter, compared with an average analyst estimate of $14.9 billion, according to data compiled by Bloomberg. Excluding some items, profit in the April period rose to 93 cents a share. Analysts projected 89 cents.

HP has experienced a surge in demand for laptops needed during lockdowns caused by the Covid-19 pandemic, and those sales are persisting, Chief Executive Officer Enrique Lores said. The printing and supplies business has also rebounded strongly, helped by more companies reopening their offices and stocking up again.

“We think many of the changes that the pandemic has brought are here to stay with us in the future,” Lores said in an interview. “We are confident in the future of the PC business, this year, next year and beyond.”

Revenue from Personal Systems, mostly computers, rose 27% to $10.6 billion in the period ended April 30. Printing sales climbed 28% to $5.3 billion.

In the Personal Systems unit, sales to consumers jumped 72%, accelerating from last quarter’s 34% expansion, while revenue from corporate customers gained 10% from a year earlier.

Lores said HP has secured enough supply of chips amid an industrywide shortage to support the company’s growth projections. Shortages are caused by demand and have spurred the HP CEO to sign long-term contracts to make sure he gets enough of the crucial components.

The industry is in an “inflationary environment” in terms of prices for components, but is able to compensate by charging higher prices itself, he said.

© 2021 Bloomberg

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