HP Inc. CEO Enrique Lores said he expects the company’s large backlog of PC orders to reduce over the next few months as it learns how to better deal with component shortages, though he expects supply chain constraints to continue until at least May of next year.
“We expect backlog to reduce over the next quarter,” Lores said in a call with journalists and analysts ahead of HP’s fourth-quarter earnings call Tuesday. “It will be good when we start reducing that because it means customers will have to wait less for their products, and this is our plan.”
Lores made his remarks as the company reported that its fourth-quarter net revenue grew 9.3 percent year-over-year to US$16.7 billion. This allowed the company to beat Wall Street’s expectations on revenue by nearly $1.3 billion while its fourth-quarter net earnings of 94 cents per share also surpassed analyst estimates, by 6 cents.
HP’s growth was largely driven by a 25 percent increase in commercial PC revenue as consumer sales declined 3 percent in HP’s Personal Systems business, which saw US$11.8 billion in net revenue, a 13 percent increase from the same period last year. Printing net revenue, on the other hand, was up 1 percent to US$4.9 billion, mostly thanks to growth on the commercial side.
These results allowed HP to finish its 2021 fiscal year, which ended in October, with a net revenue of US$63.5 billion, a 12.1 percent increase from the previous year. The company’s stock price was up more than 8 percent in after-hours trading Tuesday.
During his call with journalists and analysts, Lores said HP’s fourth-quarter earnings results showed that the company is “hitting its stride” as it expects new growth areas – gaming, peripherals, workforce solutions, consumer subscriptions and industrial graphics and 3D printing – to deliver more than US$10 billion in revenue and double-digit growth for the company’s 2022 fiscal year.
“We are really well positioned for sustained growth going forward,” said Lores, who added that those growth areas grew 12 percent year-over-year in the fourth quarter.
Lores said HP’s order backlog for PCs is still about the same size it was at the end of the third quarter, which ended in July. This means the backlog continues to be roughly equal to an entire quarter’s worth of PC sales, which he previously told CRN US translates to approximately US$10 billion in sales.
While Lores expects the company to make progress in working through those orders over the next few months, he cautioned that progress “depends on the component in some areas” as supply issues continue.
“We think we are going to be in a supply-constrained environment at least through the first half of fiscal year ” — which ends in April of next year — “based on based on what we see today,” Lores said.
However, Lores said, HP is learning how to deal with component shortages better, which has helped the company fulfil more orders.
“What has changed is we are starting to see the impact of all the work that we have been doing to manage mix better, and this is what is reflected in the performance that we posted today,” he said.