The work-from-home trend and a good bit of cost-cutting continues to be two major tailwinds to computing giant HP (HPQ).
Here are the second fiscal quarter results, compared to Bloomberg estimates:
Sales at HP’s personal systems and and printing segments dropped 7% and 19%, respectively, from the prior year. Operating profits in the personal systems segment surged 43% from the prior year, but fell 35% in the printing business.
Executives on a media call said sales were held back by supply constraints from factories in China due to the COVID-19 pandemic. Most of HP’s production in the country is now back up and running.
Notebook computer sales rose 5% as consumers rushed to buy gear to work from home amidst the pandemic.
The company outlined third fiscal quarter earning guidance of 39 cents to 45 cents a share. Consensus forecasts called for 47 cents a share.
HP CEO Enrique Lores told Yahoo Finance on the call that product demand has been recovering steadily in China as the country has exited quarantine. He said the team will be looking to China to see how the U.S. bounces back as more states reopen.
What is unclear at the moment is if HP will continue with its $8 billion buyback plan over the next 12 months (outlined in February pre-pandemic) given the changing environment where cash preservation is paramount. CFO Steve Fieler was non-committal following a question by Yahoo Finance on whether the full amount would still be purchased, but emphasized again a willingness to use HP’s strong balance sheet to drive value creation.
HP ended the quarter with $4.1 billion in cash.
“We believe we are undervalued,” Fieler said.