By Maria Armental
HP Inc.'s stock declined 12% to $15.06 a day after the Silicon Valley company pulled financial projections for the year, citing uncertainty about the business impact of the pandemic, and left unresolved the timing of its promised $15 billion worth of stock repurchases.
Chief Executive Enrique Lores and Chief Financial Officer Steve Fieler, speaking with analysts at a conference call on Wednesday, said HP remained committed to a significantly enhanced repurchase program but said that specifics would be determined when market conditions stabilize.
In February --while locked in a hostile takeover fight with Xerox Holdings Corp. -- HP pledged to buy back $15 billion of its own stock with $8 billion of that in the first year.
The market capitalization of HP, born from the 2015 split of Hewlett-Packard Co., stands at roughly $22 billion.
HP's April quarter results showed the early impact of the pandemic, both in customers' buying changes and supply chain disruption that led to an 11% revenue decline.
Hardest hit in the April quarter was the print business, with both supply and hardware seeing a double-digit percentage decline.
The printing business, while smaller than the computer business, typically carries a larger profit margin.
In the April quarter, the print business' operating margin narrowed to 13.2%, from 16.4% a year earlier, while the personal systems' margin improved to 6.6%.
Over all, second-quarter profit fell 2.3% to $764 million, while revenue fell to $12.47 billion.
Earnings beat Wall Street targets but revenue fell short of analysts' projected $12.93 billion, according to FactSet.
Company officials said they saw a significant slowdown in commercial print in late March as offices closed and events and trade shows were cancelled, and said they expected a larger hit to the print business in the third quarter.
For the personal computer business, Mr. Fieler said it was a back-ended quarter, with remote work and schooling driving demand higher, particularly for notebooks.
HP historically doesn't give revenue projections but said that it expects profit this quarter to fall to a range of 35 cents to 41 cents a share, or 39 cents to 45 cents a share on an adjusted basis. Analysts, who expected 47 cents a share, have since revised their projections within HP's range, according to FactSet.
The Silicon Valley company said its supply chain returned to full capacity in early May, which should help it clear the backlog.
Write to Maria Armental at firstname.lastname@example.org