HP CEO: COVID-19 Vaccine Rollout Key To Future Commercial Growth

‘We feel that as the pandemic gets under control, then the commercial business will come back. But it‘s hard at this point to exactly project when or how because it really depends on how far we can get the majority of the population vaccinated and people going back to the office,’ CEO Enrique Lores says.

HP Inc. CEO Enrique Lores said he expects growth will return to the company’s commercial PC and print businesses when a majority of the world’s population gets vaccinated for COVID-19.

“We feel that as the pandemic gets under control, then the commercial business will come back,” Lores (pictured) said during a call with reporters and analysts Tuesday, in response to a question from CRN. “But it‘s hard at this point to exactly project when or how because it really depends on how far we can get the majority of the population vaccinated and people going back to the office.”

[Related: HP CEO: Remote Learning And Work Driving ‘Unprecedented Demand’ For PCs]

The Palo Alto, Calif.-based company reported a 12 percent year-over-year decrease in net revenue for its commercial PC business for the fourth quarter of its 2020 fiscal year, ended Oct. 31, which Lores said was the result of many companies reducing their spending as they continue to deal with the pandemic’s economic fallout.

“The impact that we see in the commercial space is driven by the situation that we see in many, many countries with the pandemic,” he said. “With people not working from the office, companies reducing their investment, this has been impacting the growth and the trajectory of the commercial business, both for PCs [and] also for print.”

However, Lores said, the slowdown in commercial growth didn’t stop HP from achieving a new milestone in the company’s history during the quarter: 19 million PC shipments, which was driven by a 24 percent increase in net revenue for HP’s consumer PCs.

“We expect in the case of PCs that demand to continue to be very strong for the foreseeable future, driven by this strength we see in consumer,” he said.

Lores said the company’s continuing momentum for PCs in the consumer and education segments is why HP issued strong guidance of 64 to 70 cents per share for net earnings in the upcoming first quarter of the company’s fiscal 2021, which began November 1.

On the consumer PC side, Lores said the consumer premium and gaming segments grew 29 percent and 23 percent year-over-year, respectively, while revenue from displays and accessories grew 59 percent. He added that HP’s Chromebook business doubled in both revenue and units shipped in the fourth quarter.

Patrick Moorhead, president and principal analyst at Moor Insights and Strategy, said he thinks HP performed well despite operating in a “very difficult and uncertain environment.” While the pandemic has taken a toll on HP’s commercial business, it has driven more consumers to buy PCs, he added.

“What is becoming evident is that as consumers are locked down, families don‘t want to share their PCs with each other and instead want a higher quality experience of their own,” he said.

Overall, HP’s Personal Systems net revenue was $10.4 billion, flat from the same period last year, while its Printing net revenue was $4.8 billion, down 3 percent year-over-year.

The company’s total net revenue for the fourth quarter was $15.26 billion, down 1 percent year-over-year but beating Wall Street’s expectations by $540 million. Net earnings for the quarter was $668 million, up 72 percent from $388 million one year before, or 62 cents per share, which was 10 cents above what Wall Street analysts were expecting.

For the entire 2020 fiscal year, net revenue was $56.64 billion, a 3.6 percent decrease from $58.76 billion in fiscal 2019. Net income for fiscal 2020 was $2.84 billion, down nearly 10 percent from $3.15 billion one year earlier.

The company’s stock price was up more than 5 percent in after-hours trading Tuesday.