HP (HPQ) Q3 2016 Results

posted in: Earnings Call, Notes | 0

Dion Weisler – President and Chief Executive Officer

From market share to maximizing profits

“We were more challenged in our business ink products where we drove pricing discipline and lost some share. While our Japanese competitors are talking about shifting their focus from share to profits due to the strength of the yen, it is not broadly evident yet that this is showing up in less aggressive pricing.”

Managing the supplies business

“…we made a strategic decision to evolve how we run and manage our supplies business in recognition of the changing market dynamics, giving global price transparency. To harmonize pricing, we determined an increase in marketing, combined with a reduction in channel inventory levels, was necessary. And we took the first step in the third quarter. With continued support from our channel partners, the execution is on track.”

Some shortages in supplies expected in adjacent segments to the PC industry

“With regards to shortages in supplies, I don’t believe, in Q3, we saw any material shortages that we had to with. However, as you know, these are long supply chains and we are seeing on the horizon some shortages, particularly around LCDs, DRAM and Flash memory. And it’s not so much coming from the PC industry. It’s more coming from adjacent categories going to – glass going into televisions, memory going into phones that are likely to double density, which is putting pressure on the overall industry.”

Cathie Lesjak – Chief Financial Officer

Too early to tell on the Brexit effect

“For Q3, we saw very, very limited impact from Brexit. And this is largely as a result of the fact that we were largely hedged by the time the Brexit vote actually happened. And so, Q3 was really a non-event. On a go-forward basis, it’s unclear exactly what the impact is going to be. We are definitely seeing and, in some cases, following with our own pricing increases. What’s less clear is not so much what the currency impact is and how we adjust to the currency impact, whether it’s through hedges or through price increases, it’s really what is going to be the impact on demand, what is GDP going to actually do, both in the UK and then, frankly, if it spreads broader to EMEA. And it’s just too early to tell.”

Inventories down, marketing investments up

“…supplies channel inventories is down over the course of the half by $450 million and we were also going to increase our marketing investments.