The Six Five team discusses HP Inc Q3FY24 Earnings
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Transcript:
Patrick Moorhead: So, mixed results, really appreciated time you and I both had with CEO, Enrique Lores. I’m going to do a highlights, lowlights and what they talk about the future. So, here are some of the highlights. First time back to revenue growth in nine quarters, that is a big deal and it was on the back of PC growth. It was up 5% year-on-year, and 6% on commercial units, 8% on revenue. What’s interesting with the Dell decline, most of Dell’s business by the way, commercial was flat at Dell. And here, we have HP who did really, really well. Consumer printing was up 2%. Print supplies is expected. EPS within guide, and this is not really a surprise, but they do have a fab for some of their printer chips.
They got 50 million bucks through the Chips Act, surprise. Here are some of the lowlights, a lot of highlights, but there’s some lowlights. Printer margins and revenue, it looked like tough China results, aggressive price environment there. Consumer PC declines, we saw Dell at 22%. They were off 6%. Their revenue, interestingly enough, was only off by 1%. And I can attribute that. I don’t have all the data for it, but could that be the AI PC sell-in? Possibly. Commercial printing was the toughest there at off 5%. And EPS, they hit expectations. EPS was well within the guide. It was below the EPS expectations. There was potential that investors thought that printing would do better than it did, but hey, stocks are about the future, not about how they did. They do expect fourth quarter print improvements with cost cuts, even revenue strength. They do expect meaningful AI PC sales growth in the back half, just like what I said. Over a 10% revenue mix in the second half and 50% mix in 2027, a lot faster growth in consumer. Again, that 50% in 2027, let’s not forget that that’s a split between desktop and notebook.
And we don’t really know precisely what AMD and Intel are going to do in desktop and AI. And right now, the definition of an AI PC doesn’t really factor in any, let’s say NVIDIA GPU. Like Dell, they’re expecting to see commercial demand swell with the Win 10 to Win 11 adoption based off Microsoft cutting off non-free support in October of 2025. You could still spend 60 bucks per head if you want to milk that, but I don’t see enterprises doing that because they had a big swell during the pandemic and enterprises buying all new PCs. Those were Win 10 and those are getting old. Done.
Daniel Newman: Yeah, I think you covered it. I don’t think there’s really much I have to add there. I put out a tweet, you can check it out, on this topic. I fortunately have to run to a meeting here at the top of the hour, Pat. I will say that my comments in the Dell about CSG, about the overall cycle is probably my strongest reflection of the opportunity. I think these mixed silicon offerings, these mixed platform differentiation, the commercial approach differentiation, that’s going to be focal point going forward, getting a commercial to buy-in in a big way. Pat, my heart and head really says mid-’25. I know this isn’t going to be the happiest news, but again, having been out and about, done some shopping myself, started to use these things real, I’m super excited about it. I’m super excited about it. I really think we’re going to see this thing ease in. And I like to say, Pat, slow at first, then all at once.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
