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HP Inc. is a leading global provider of personal computing and other digital access devices, imaging and printing products, and related technologies, solutions, and services. Operating in more than 170 countries, the company is organized into three reportable segments: Personal Systems, Printing, and Corporate Investments . HP Inc. sells a wide range of products including desktops, notebooks, workstations, printers, and related services, catering to both commercial and consumer markets .
- Personal Systems - Offers commercial and consumer desktops and notebooks, workstations, thin clients, commercial mobility devices, retail point-of-sale systems, displays, hybrid systems, software, solutions, and services.
- Commercial PS - Focuses on enterprise and SMB customers.
- Consumer PS - Targets individual consumers with a focus on gaming and remote work.
- Printing - Provides consumer and commercial printer hardware, supplies, solutions, and services, with a focus on office and home printing solutions, graphics solutions, and 3D printing and personalization.
- Corporate Investments - Engages in investing in key growth areas such as hybrid systems, gaming, workforce solutions, consumer subscriptions, industrial graphics, and 3D and personalization, which are expected to grow significantly by the 2026 fiscal year.
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Given that most of your products are manufactured outside the U.S., and with the potential for new tariffs on imported goods, how specifically do you plan to mitigate risks to your supply chain and margins if such tariffs are imposed?
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Despite the aggressive cost optimizations under your Future Ready Transformation Plan, operating income appears to be roughly flat year-over-year; why aren't these cost savings translating into higher operating income or free cash flow growth?
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In the Print segment, you mentioned ongoing competitive pressure due to Japanese competitors leveraging the weak yen; how do you plan to sustain margins and gain market share in this challenging pricing environment?
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You expect AI PCs to make up approximately 25% of your PC unit shipments in FY '25; what concrete steps are you taking to ensure this transition drives meaningful revenue and margin expansion, especially considering potential ASP benefits?
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Given your capital allocation policy maintains a gross leverage ratio under 2x, why not reassess this target in light of improved operating performance and potential growth opportunities, potentially allowing for greater investments or increased shareholder returns?
Competitors mentioned in the company's latest 10K filing.
- Lenovo Group Limited - Competitor in the Personal Systems segment .
- Dell Inc. - Competitor in the Personal Systems segment .
- Huawei Technologies Co., Ltd. - Competitor in the Personal Systems segment .
- Acer Inc. - Competitor in the Personal Systems segment .
- ASUSTeK Computer Inc. - Competitor in the Personal Systems segment .
- Apple Inc. - Competitor in the Personal Systems segment .
- Toshiba Corporation - Competitor in the Personal Systems segment .
- Microsoft Corporation - Competitor in the Personal Systems segment .
- Samsung Electronics Co., Ltd - Competitor in the Personal Systems segment .
- Logitech International S.A. - Competitor in the Personal Systems segment .
- Canon Inc. - Competitor in the Printing segment .
- Lexmark International, Inc. - Competitor in the Printing segment .
- Xerox Corporation Ltd. - Competitor in the Printing segment .
- Seiko Epson Corporation - Competitor in the Printing segment .
- The Ricoh Company Ltd. - Competitor in the Printing segment .
- Brother Industries, Ltd. - Competitor in the Printing segment .
| Customer | Relationship | Segment | Details |
|---|---|---|---|
TD Synnex Corp | Third-party distributor/reseller | All | Accounts receivable was 9.7% of gross A/R as of Oct 31, 2024, down from 13.2% in 2023. |
Recent developments and announcements about HPQ.
Financial Reporting
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Revenue and Profit Performance: HPQ reported a 2% year-over-year increase in revenue for the second consecutive quarter, with growth in both Personal Systems and Print segments. The company achieved a non-GAAP EPS of $0.93, marking a 3% increase year-over-year .
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Management’s Forward Guidance: Looking ahead to fiscal year 2025, HPQ expects the PC market to grow mid-single digits, with commercial segments growing faster than consumer ones. The company anticipates AI PCs to constitute about 25% of PC unit shipments in FY '25, which is expected to drive average selling prices higher . HPQ also plans to maintain its focus on profitable growth in premium consumer and gaming segments .
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Market Conditions and Strategic Initiatives: HPQ is optimistic about the opportunities in AI and the future of work, leveraging its portfolio to capture growth in commercial and solutions segments. The company is investing in AI-powered capabilities and software to enhance customer experiences and drive productivity .
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Analyst Questions and Management Responses: Analysts inquired about the impact of AI PCs on average selling prices and margins, to which HPQ responded that AI PCs are expected to improve ASPs and contribute positively to margins. The company also addressed questions about the competitive landscape in print and the potential impact of tariffs on its supply chain, indicating readiness to adapt to changes .
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Fiscal 2024 Full Year Results:
- GAAP Diluted Net EPS: $2.81, which is above the previously provided outlook of $2.62 to $2.72 per share.
- Non-GAAP Diluted Net EPS: $3.38, within the previously provided outlook of $3.35 to $3.45 per share.
- Net Revenue: $53.6 billion, a slight decrease of 0.3% from the prior-year period.
- Net Cash Provided by Operating Activities: $3.7 billion, with a free cash flow of $3.3 billion.
- Shareholder Returns: $3.2 billion returned to shareholders through share repurchases and dividends.
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Fourth Quarter Results:
- GAAP Diluted Net EPS: $0.93, above the previously provided outlook of $0.74 to $0.84 per share.
- Non-GAAP Diluted Net EPS: $0.93, within the previously provided outlook of $0.89 to $0.99 per share.
- Net Revenue: $14.1 billion, an increase of 1.7% from the prior-year period.
- Net Cash Provided by Operating Activities: $1.6 billion, with a free cash flow of $1.5 billion.
- Dividend Increase: HP announced a 5% increase in its quarterly cash dividend, resulting in a dividend of $0.2894 per share starting in the first fiscal quarter of 2025.
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Segment Performance:
- Personal Systems: Net revenue was $9.6 billion, up 2% year over year, with a 5.7% operating margin.
- Printing: Net revenue was $4.5 billion, up 1% year over year, with a 19.6% operating margin.
Earnings Call
HPQ recently released its Q4 2024 earnings call transcript, highlighting several key points:
Overall, HPQ is focused on strategic growth areas, particularly in AI and commercial segments, while managing costs and maintaining profitability in a competitive market environment.
Earnings Report
HP Inc. Releases Fiscal 2024 Earnings Results
On November 26, 2024, HP Inc. announced its fiscal 2024 full-year and fourth-quarter financial results. Here are the key highlights:
These results reflect HP's steady progress in its Personal Systems and Print segments, positioning the company well for future growth opportunities .
Financial Actions
Dividend Policy
HP Inc. Announces Dividend Increase
HP Inc. has announced a 5% increase in its planned quarterly cash dividend. This change will commence with the dividend for the first fiscal quarter of fiscal year 2025, resulting in a quarterly dividend of $0.2894 per share. This decision was authorized by HP's Board of Directors and reflects the company's confidence in its financial position and future prospects. The dividend is payable on January 2, 2025, to stockholders of record as of the close of business on December 11, 2024 .