HP Inc. on Monday reported a steep increase in personal computer sales and overall revenue, and offered strong guidance for its fiscal year, offering the latest proof of a PC boom with no immediate end in sight.
“The PC market is $200 billion bigger than it was before the pandemic because of way people are working, playing,” HP Chief Executive Enrique Lores told MarketWatch in an interview before the results were announced. “We see this hybrid world for the foreseeable future.”
Lores pointed to double-digit revenue growth for gaming, peripherals, workforce solutions, consumer subscriptions, and industrial graphics and 3-D as further signs of the resurgence.
HP’s hyper growth in gaming, industrial 3-D, and peripherals — all of which grew by more than 20% year-over-year, and are on pace to be a $10 billion business — bear watching as the company expands into new markets, according to Daniel Newman, principal analyst at Futurum Research.
Though backlog remains an issue amid a components crunch that has bedeviled makers of consumer electronics and other products, HP has made “excellent progress managing the supply chain,” Lores said.
Net revenue was a record $17 billion, up 9% from $15.6 billion a year ago. It was the most reported by HP since the separation of Hewlett-Packard Co. in 2015.
HP’s stock HPQ,
HP reported fiscal first-quarter net earnings of $1.1 billion, or 99 cents a share, compared with net earnings of $1.1 billion, or 83 cents a share, in the year-ago quarter. Adjusted earnings were $1.10 a share. HP, which provided an outlook of 92 cents to 98 cents a share for the first quarter, offered guidance of $1.02 to $1.08 a share for its current second quarter, in the upper range of what analysts have forecast.
The company also announced it was returning $1.8 billion to shareholders in the form of share repurchases and dividends.
Analysts surveyed by FactSet had expected net income of $1.02 a share on revenue of $16.5 billion in the first quarter.
HP’s personal systems sales, which include PCs and laptops, made up a large chunk of quarterly revenue, at $12.2 billion, up 15% from the same quarter a year ago. The performance blew past the estimates of analysts polled by FactSet. They had forecast $11.6 billion.
Printer revenue, however, declined 4% to $4.8 billion.
HP’s stock has declined 9% this year, while the broader S&P 500 index SPX is down 8% in 2022.
Lores’ comments on the ongoing PC boom mirror those of Intel Corp. INTC,
“The PC has become more essential to everyday human life than ever before. This new normal of hybrid work and education,” Gelsinger said then. “This market is now structurally larger and we see this 1 million unit per day kind of number as a sustainable one for the future, and we share this with our ecosystem partners, and Microsoft that yep, this is just a bigger, more important industry.”
Shares of EPAM Systems Inc. undefined tumbled 9.8% to pace all S&P 500 undefined components in premarket losses, after the provider of digital platform engineering services said it was withdrawing its financial guidance as a result of "military actions" in Ukraine. The company had said in its fourth-quarter earnings report out Feb. 17 that it expected first-quarter revenue of $1.17 billion to $1.18 billion and 2022 revenue of at least $5.15 billion, which compared with the FactSet consensus at the end of January for first-quarter revenue of $1.11 billion and 2022 revenue of $4.87 billion. EPAM said in its 10-K annual report filing late Friday that its largest delivery centers were located in Ukraine, Belarus and Russia. As of Dec. 31, it had 12,389 delivery professionals in Ukraine, 9,416 in Belarus and 8,933 in Russia. "EPAM's highest priority is the safety and security of its employees and their families in Ukraine. The company is proactively working to relocate its employees to lower risk locations in Ukraine and neighboring countries." The company stated on Monday. The stock, which tumbled 13.7% last week, is on track to open at the lowest price seen during regular-session hours since March 9, 2021. It has plunged 37.2% over the past three months through Friday, while the S&P 500 slipped 4.6%.
Jon Swartz is a senior reporter for MarketWatch in San Francisco, covering many of the biggest players in tech, including Netflix, Facebook and Google. Jon has covered technology for more than 20 years, and previously worked for Barron’s and USA Today. Follow him on Twitter @jswartz.
