Two of the world’s largest PC companies have delivered opposite financial results, as the pandemic-driven computer boom continues to dry up.
Lenovo reported a 4 per cent operating profit leap for the September quarter. This is despite a 4 per cent slide in revenue. These results were far better than Wall Street analysts’ consensus forecast of a 9 per cent profit drop.
Lenovo is the world’s leading PC maker, commanding roughly 23 per cent market share.
HP, whose focus is PCs and printers, reported a 4.1 per cent drop in revenue for the fiscal fourth quarter, ending Oct 31, to A$21.94 billion, crippled by a 20 per cent decline in consumer spending.
The fall would have been larger if not for its commercial business, which grew 7 per cent, as people continue to drip back into offices.
Analysts expected HP to bring in revenue of A$23.23 billion.
Revenue in the company’s Personal Systems segment, which includes PCs, fell 13 per cent to A$15.5 billion, with unit sales dropping 21 per cent. Consumer revenue for PCs fell 25 per cent, while printing revenue dropped 7 per cent, with printer sales down 3 per cent.
Along with the dismal quarterly results came the news that HP plans to cut 4,000 to 6,000 employees over the next three years, in a bid to stop some of the losses.
HP currently has 51,00 employees. HP said these staff cuts “should result in annualised gross run rate savings of A$2.1 billion or more in the next three years.”
Shares rose 1 per cent following the announcement.
Worldwide PC shipments suffered the steepest drop in over two decades during the September quarter, falling 19.5 per cent year-on-year, according to Gartner.
Shipments of desktop and laptop computers totalled just 68 million units in the third quarter of 2022.
That marked the fourth consecutive quarter of year-over-year decline – the biggest dive since the mid-90s, when Gartner began tracking the market.
HP joined Intel, who recently reported a 15 per cent revenue dive for the quarter, and have plans of thousands of lay offs.
The difference with Lenovo’s third quarter result is it has built out other profitable areas of its business.
Lenovo’s PC shipments dropped 16 per cent year-on-year last quarter.
But operating profit at its solutions-and-services group grew 29 per cent year-on-year. Lenovo’s ‘Managed Service Business’ — it’s IT arm — saw profits jump 69 per cent.
These areas also have a high operating profit margin of 21 per cent, compared to the 7 per cent margin on PCs.
