HP (NYSE:HPQ) shares fell by 12% in the last week after reporting lower sales. Expectations of weak profits ahead worsened the selling pressure. What happened?
HP posted an 11% decline in PC and printer sales. When the stay-at-home order drove working from home, HP should have capitalized on stronger PC and laptop sales. Desktop sales fell 18% to $2.41 billion while notebook sales of $5.08 billion are unchanged from last year.
Printing revenue fell 19% to $4.16 billion. HP’s printing unit is a drag and will continue to suffer from corporations cutting purchases. Unless the staff is 100% back in the office, printing demand will disappoint.
Dell (NYSE:DELL) erased much of its losses from the March lows when it posted strong first-quarter results. Dell earned $1.34 a share (non-GAAP) as revenue fell 0.1% Y/Y to $21.89 billion. The bad news is the stock buyback suspension and 401k match terminated. The lower employee expense will save the company money and benefit shareholders but hurts staff.
Your Takeaway
PC and notebook unit sales are on the rise and will outpace smartphone sales. The work from home trend is here to stay, driving demand for full-sized devices (i.e. computers). Dell typically is not shareholder-friendly and HP is an under-performer. Watch both stocks as a possible value investing play.
