HP Beats Financial Forecast as Xerox Gets Aggressive

With Xerox hot on its heels, HP Inc.—the PC and printer company—announced better than expected financial results.

“We delivered an excellent Q4, with 11 percent growth,” HP president and CEO Enrique Lores said in a prepared statement. “Our strategy is working, and we are confident in our business heading into fiscal year 2020.”

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HP reported net earnings of $400 million on revenues of $15.4 billion for its fourth fiscal quarter of 2019 and net earnings of $3.2 billion on revenues of $58.8 billion for fiscal year 2019. The results beat forecasts, and while YOY revenue growth was only .3 percent, that was enough to quell fears about its previous slowing growth rates.

HP’s biggest business, for PCs, grew 4 percent in fiscal 2019 to $10.43 billion in revenues, also beating expectations thanks to businesses upgrading from Windows 7 to Windows 10. Its second-biggest business, Printing, was down 6 percent to $5.03 billion.

But the elephant in the room, of course, is Xerox, which announced earlier this month that it would like to acquire HP. The firm offered HP shareholders $33.5 billion, but that offer was rejected by HP’s board, which said it significantly undervalued the company.

That’s when things got ugly: Xerox said that it was open to a hostile takeover, and it then issued a statement noting that it would “engage directly with HP shareholders to solicit their support in urging the HP Board to do the right thing.”

“We will not apologize for our ‘aggressive’ tactics,” Xerox CEO John Visentin wrote in the letter to HP’s board. “The most efficient way to prove out the scope of this opportunity with certainty is through mutual due diligence, which you continue to refuse, and we are obligated to require.”

HP didn’t discuss its Xerox problem during a post-earnings conference call. But it did say that it was informed by Intel that it could face chip shortages in the coming months, and that that could impact its PC sales and extend its customers’ migrations to Windows 10.

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Conversation 13 comments

  • jeff.bane

    27 November, 2019 - 9:44 am

    <p>Man who would buy a Xerox PC.</p>

  • bob_shutts

    27 November, 2019 - 10:03 am

    <p>Net earnings of only $400,000.00 on revenues of $15.4 billion? Is that a misprint?</p>

    • ndragonawa

      27 November, 2019 - 10:18 am

      <blockquote><em><a href="#492531">In reply to Bob_Shutts:</a></em></blockquote><p>Looks like it</p><p>Should be $400M not $400k</p>

  • will

    Premium Member
    27 November, 2019 - 10:27 am

    <p>Intel is having chip issues?? </p><p><br></p><p>/s</p>

  • dougkinzinger

    27 November, 2019 - 10:37 am

    <p>I don't understand Xerox's brinksmanship here. What's the point of trying to bully the company you wish to aquire?</p>

    • carl_taylor

      27 November, 2019 - 5:26 pm

      <blockquote><em><a href="#492542">In reply to dougkinzinger:</a></em></blockquote><p>They are trying to force HP to let them in to do Due Diligence. Given poor earnings on sales, you'd need to check before uping the offer as really $400M on $15.4B is piss poor</p>

  • jimchamplin

    Premium Member
    27 November, 2019 - 10:45 am

    <p>HP’s printing division is shrinking.</p><p><br></p><p>Xerox: My dudes. We shall strike while the iron’s hot.</p>

    • Paul Thurrott

      Premium Member
      27 November, 2019 - 3:46 pm


  • bart

    Premium Member
    27 November, 2019 - 11:02 am

    <p>$400K profit on revenues of $15.4B.</p><p><br></p><p>Yikes! Margins anyone? </p>

  • bluvg

    27 November, 2019 - 12:49 pm

    <p>Xerox PCs? Presumably they'd keep the HP name, but I have a feeling this would put a damper on their PC plans. They were just freed from the shackles of big HP….</p>

  • chaad_losan

    27 November, 2019 - 1:06 pm

    <p>I don't get it? Xerox is worth 1/3 of that of HP and the want to forcefully take over the company? Who is hell is bankrolling this? China? They are high the math does not work.</p>

    • Greg Green

      28 November, 2019 - 12:03 pm

      <blockquote><em><a href="#492588">In reply to chaad_losan:</a></em></blockquote><p>Xerox also has about 5 times as much debt as cash on hand, unlike HP which has about 1:1.</p><p><br></p><p>So the new company would have $10B debt, $6B cash, plus the acquisition debt of $33B. Worse ratio than xerox currently.</p>

  • Greg Green

    28 November, 2019 - 12:04 pm

    <p><span style="color: rgb(8, 14, 20);">"We note the decline of Xerox's revenue from $10.2 billion to $9.2 billion (on a trailing 12-month basis) since June 2018, which raises significant questions for us regarding the trajectory of your business and future prospects," HP's board wrote when rejecting Xerox's offer.</span></p><p><br></p><p><span style="color: rgb(8, 14, 20);">Sounds like xerox is trying to grow by acquisition rather than sales.</span></p>

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