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HP releases earnings early, stock jumps 4%

HP Inc. shares spiked 4% Thursday after the computer maker released holiday earnings earlier than expected and showed a $1 billion jump in quarterly sales that crushed estimates.

The company
HPQ,
+0.68%

reported net earnings of $1.1 billion, or 92 cents a share, compared with net earnings of $700 million, or 46 cents a share, in the year-ago quarter. Revenue improved to $15.6 billion from $14.6 billion a year ago. Analysts surveyed by FactSet had expected earnings of 66 cents a share on revenue of $15 billion.

“The numbers reflect strength in innovation, a consumer need to connect and communicate, and great confidence in our business plan,” HP Chief Executive Enrique Lores told MarketWatch in a phone interview. HP had previously provided guidance of between 58 cents and 64 per cents a share.

Don’t miss: The pandemic has brought the personal computer back to life, with help from Zoom

Personal Systems’ net revenue was up 7% to $10.6 billion as consumers in particularly snapped up notebooks, while printing net revenue was $5.0 billion, also up 7% year over year. HP also said it returned $1.6 billion to shareholders in share repurchases and dividends.

“HP has quietly been one of the biggest winners of the past year despite the hardships brought on by the global pandemic,” Daniel Newman, principal analyst at Futurum, told MarketWatch. “I believe work from home will continue to drive greater demand for higher quality PC’s for work, but the behavioral changes over the past year will also drive demand for high performance devices that allow users to play, stream, consume, and connect.”

The quarter marked the first for Marie Myers, who was named Chief Financial Officer last week after serving as acting CFO and Chief Transformation Officer since October 2020. HP offered guidance of adjusted second-quarter earnings of between 84 cents and 90 cents a share. FactSet is predicting 61 cents a share.

The COVID-19 pandemic has seemed to spark a renaissance of the PC market, dovetailing with a spike in gaming and in-home entertainment. Americans increasingly have upgraded their home systems to larger monitors, headsets, fancy mouses and other peripherals to play games and watch content, goosing the market and prompting HP to announce the acquisition of peripherals maker HyperX for $425 million on Wednesday.

Read more: HP to acquire peripherals maker HyperX for $425 million

HP estimates the world-wide market for peripherals is expected to grow to $12.2 billion by 2024, and gaming accounts for 37% of the U.S. peripherals market, and 53% in China.

The report was released about an hour before trading closed on Thursday, when it was scheduled to be released after the bell. A company spokeswoman said it was unclear why the results were released early. HP shares have ascended 33% over the last 12 months. The broader S&P 500 index
SPX,
-2.40%

has improved 30% in the past year.

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