HP Could Be A Hidden Beneficiary Of Yen Devaluation
Adam Levine-Weinberg • 15 Comments
Adam Levine-Weinberg • 15 Comments
Thu, Jun. 23, 2:06 PM
- HP (HPQ +2%) is recalling 41,000 notebook computer batteries over fire risks, according to the Consumer Product Safety Commission.
- The batteries in question were for HP and Compaq notebooks and sold at Best Buy, Wal-Mart and Costco along with authorized dealers as well as online from March 2013 to August 2015.
- The company's had about seven reports so far of the Chinese-made packs melting, overheating or charring.
Tue, Jun. 21, 5:35 PM
Tue, Jun. 21, 4:24 PM
- The company expects FQ3 non-GAAP EPS of $0.43-$0.46 vs. consensus of $0.39.
- Full-year EPS is reaffirmed at $1.59-$1.65.
- At 4:30 ET, there will be a conference call in which the CEO, the CFO, and the President of Printing will discuss a recent sale, investments in printing, and the updated financial outlook.
- HPQ +3.9% after hours
Mon, Jun. 20, 10:38 AM
- Open Text (OTEX +2.4%) agrees to acquire customer communications software management assets from HP (HPQ +0.9%) for ~$315M.
- OTEX says the deal includes HP Extream, HP Output Management, HP TeleForm and HP LiquidOffice, which are collectively used to manage customer communications, process automation and document delivery.
- OTEX expects the acquired businesses to generate $110M-$125M of annualized revenue but be immediately accretive to earnings and on the OTEX operating model by the end of Q1 FY2017.
Wed, May 18, 12:45 PM
- Stratasys (SSYS -2.5%) and 3D Systems (DDD -2.5%) are trading lower today as analysts warn of threats to their business from HP's (HPQ +0.9%) Jet Fusion 3D printers, detailed yesterday.
- Pacific Crest's Weston Twigg says it's a "negative" for those two companies, but not a surprising one. The competitive shakeout could take years, but HP's technology "could be disruptive, and customers have shown a high desire to partner with HP on the development of the printer," Twigg writes.
- Similarly, Piper Jaffray's Troy Jensen sees a (not overwhelming) threat in price and speed from HP's new printers. Low HP pricing could shrink pipelines, but some of 3D Systems' and Stratasys' printers "are better in certain applications."
- Twigg also thinks HP's printers could mean "modest" positives for less direct competitor Proto Labs (PRLB +0.9%), focused on the commercial market, and HP partner Materialise (MTLS -0.7%).
- Now read Stratasys: The Rally Will Remain Challenged »
Tue, Apr. 26, 5:40 PM
Thu, Feb. 25, 1:32 PM
- Down just slightly after hours yesterday after posting in-line FQ1 EPS, slightly beating on revenue, and offering healthy FY16 EPS guidance, HP Inc. (HPQ -4.6%) is seeing bigger losses today. Not surprisingly, many of the analysts reacting to the report are nervous about major ongoing PC/printing sales declines as secular headwinds refuse to let up.
- On the earnings call (transcript), CEO Dion Weisler disclosed HP is accelerating its previously-announced restructuring program by increasing FY16 job cuts by ~3,000. "I believe there may be even more opportunity to reduce cost and streamline processes, and we will share details when finalized."
- He insisted HP's PC unit (Personal Systems, revenue -13% Y/Y) outgrew the market in FQ1, and had an all-time high commercial share of 24% in calendar Q4.Regarding Printing (revenue -17% Y/Y), Weisler reiterated a weak yen has helped Japanese rivals (Epson, Canon, etc.) price more aggressively, and also noted macro pressures, hardware channel inventory cuts, and supplies discounting (done to "combat aftermarket alternatives") weighed.
- CFO Cathy Lesjak stated HP is cutting its FY16 free cash flow guidance by $100M to $2.3B-$2.6B due to the restructuring acceleration. "We expect to retain our normalized annual free cash flow in the range of $2.9 billion to $3.2 billion."
- Wells Fargo's Maynard Um (Market Perform): "While we believe there are underappreciated aspects of HPQ that have been built over the past 12+ months (unique position in managed PC services by leveraging its managed print services, potential for gains in premium/gaming/detachable PC segments, opportunity for higher accessories attach, and share gains in displays), we believe more material growth from these is unlikely until FY17 while pressures in traditional PC/printer segments are likely to continue in FY16."
- Needham's David Rold: "Printing continues the difficult balancing act of trying to improve its installed base mix (ie. shift to relatively fewer consumers by raising ASP’s) while fighting price competition, market contraction, and a weak macro backdrop. Though these factors were known, additional headwinds emerged in the form of lower-than expected price increases and aftermarket share pressure. While very strong market presence/awareness leave us confident HP is capable of fighting these difficulties, we see increasing risk that stabilization may take longer than currently envisioned (currently expected end of ’17).”
- Deutsche's Sherri Scribner (Buy): "While F1Q-16 [free cash flow] disappointed, challenges were mostly related to timing, and HPQ only reduced FY-16 FCF [guidance] by $100M despite accelerating restructuring actions into FY-16. We believe that mgmt is taking the necessary steps to right size its expenses and develop new products to drive profitable share gains."
Thu, Feb. 25, 9:12 AM| Thu, Feb. 25, 9:12 AM | 9 Comments
Fri, Jan. 15, 12:35 PM
- On a day the Nasdaq is off 4.1%, companies with strong PC exposure are seeing even bigger losses after Intel (down 9.2%) beat Q4 estimates and provided healthy 2016 sales guidance, but also reported a slowdown in server CPU sales growth and offered cautious earnings call remarks about Chinese demand and macro trends.
- Intel's Client Computing Group (provides PC/mobile CPUs) only saw a 1% Y/Y revenue drop in Q4 in the face of weak PC demand. However, volumes were down 16%, with desktop, notebook, and tablet CPU volumes respectively falling 9%, 10%, and 33%. A 17% increase in ASPs minimized Intel's revenue drop. Earlier this week, IDC and Gartner respectively estimated PC shipments fell 10.6% and 8.3% Y/Y in Q4.
- The list of PC-related names seeing big losses includes Microsoft (MSFT -4.8%), Nvidia (NVDA -6.7%), AMD (AMD -8.1%), HP Inc. (HPQ -5.2%), Micron (MU -8.9%), Seagate (STX -6.4%), and Western Digital (WDC -6.4%). AMD reports on Jan. 19, Microsoft and Western on Jan. 28, and Seagate on Jan. 29.
- In other Microsoft news, the company has carried out price cuts of up to 17% for Azure cloud computing services, following new price cuts from Amazon, and is reportedly looking to acquire Indian mobile ad network owner InMobi. Google was rumored to be in buyout talks with InMobi last year.
- AMD, meanwhile, has begun shipping its Opteron A1100 (Seattle) ARM server CPU. Seattle, first announced in 2013, sports up to eight 64-bit ARM Cortex A-57 CPU cores, and enters a market also targeted by AppliedMicro, Cavium, and Qualcomm.
Thu, Jan. 7, 11:19 AM
- Believing material 2016 catalysts are lacking and that top-line pressures in the company's core PC and printing ops will more than offset growth opportunities, Wells Fargo's Maynard Um has downgraded HP Inc. (HPQ -3%) to Market Perform.
- Um still thinks HP can grow sales in the premium, detachable, and gaming PC segments, boost accessories/monitor sales, and use its managed print services business to grow managed PC services revenue. He also gives the company a pass on its decision to forego major Black Friday discounting, though admitting it could lead to some share loss.
- HP is underperforming on a morning the Nasdaq is down 1.3%, and the S&P 1%.
- Two days ago: HP adds 4K/OLED displays to notebook line, unveils ultra-thin business notebooks
Nov. 25, 2015, 1:31 PM
- What used to be HP's PC/printing unit (NYSE:HPQ) has plunged below $13 after missing FQ4 sales estimates on the back of 14% Y/Y sales drops for both its PC and printing segments, and cutting its FY16 EPS guidance below consensus.
- With printing op. income (-18% in FQ4 to $862M) well above PC segment op. income (-17% to $294M), printing headwinds are getting a lot of attention. On the earnings call (transcript), CEO Dion Weisler stated weak market demand and price pressure both weighed on printing. "We do not expect the landscape to improve in the near future and we will constantly assess how the market evolves."
- He added forex is affecting pricing, and that lower printer price points are "attracting buyers that might have different usage patterns then we originally targeted." Printing supplies revenue stabilization now isn't expected until the end of 2017. The growth of online/mobile document and photo sharing has been a major printing headwind for some time.
- Needham's David Rold has downgraded to Hold just three weeks after upgrading to Buy on account of a low valuation and 3%-4% dividend yield. "[A]s some of the valuation argument has played out, we believe further upside will require real improvement in the underlying business. The sharp turn of the Printing market (and delay in improvement that results) in just 2-3 months since last speaking with the Street warrants caution..."
- Likewise, Goldman's Simona Jankowski (Neutral) is worried about soft supplies demand (sales -10% in FQ4). "While the company intends to reduce its cost base to partially offset market headwinds, we would need to see evidence of supplies stabilization before becoming meaningfully more positive on HP Inc.’s trajectory."
- Deutsche's Sherri Scribner (Buy) remains bullish. "While we do not expect HPQ to be immune to [market] trends, we believe the company can outgrow its peers and end markets, driven by market share gains and a focus on profitable growth opportunities. A recovery in supplies is a key driver of free cash flow strength longer term, and while we were disappointed by the push out of this recovery to later in FY-17, we believe [management] has the right tools in place to stabilize this business."
Nov. 25, 2015, 12:46 PM
Nov. 25, 2015, 9:19 AM
Nov. 24, 2015, 5:39 PM
Nov. 24, 2015, 4:16 PM
- Hewlett-Packard: FQ4 EPS of $0.93 misses by $0.03.
- Revenue of $25.71B (-10% Y/Y) misses by $650M.
- Results cover both HP Inc. (NYSE:HPQ) and Hewlett-Packard Enterprise (NYSE:HPE).
- HP Inc. expects FQ1 EPS of $0.33-$0.38 and FY16 (ends Oct. '16) EPS of $1.59-$1.69, below consensus estimates of $0.42 and $1.71.
- Hewlett-Packard Enterprise expects FQ1 EPS of $0.37-$0.41 and FY16 EPS of $1.85-$1.95 vs. consensus estimates of $0.43 and $1.88.
- HPQ -5.6% after hours. HPE +2%.
Nov. 2, 2015, 10:20 AM
- HP Inc. (HPQ - formerly HP's PC/printing unit) has soared after HP's breakup officially went into effect. HP Enterprise (HPE - IT hardware, software, and services) unit is up more moderately.
- Last month, HP announced a $3B buyback for Enterprise following the closing of a $14.6B debt offering. FY16 (ends Oct. '16) guidance for both businesses was announced in September (I, II), along with plans to cut another 25K-30K Enterprise jobs.
- SA author Chris DeMuth Jr. predicted last week HP Inc. (highly profitable, but with declining revenue due to the PC and printing industries' secular challenges) "will instantly become a potential LBO target."
HP Inc. provides products, technologies, software, solutions and services to individual consumers, small and medium-sized businesses and large enterprises, including customers in the government, health and education sectors. It operates through seven business segments: Personal Systems,... More
Industry: Diversified Computer Systems
Country: United States
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